U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
ROCKY MOUNTAIN FINANCIAL ENTERPRISES, INC.
(Name of Small Business Issuer in its charter)
Colorado 84-1251078
State or other jurisdiction of IRS Employer ID Number
incorporation or organization
10200 W. 44th Ave., Suite #400, Wheat Ridge, CO 80033
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (303) 442-7674
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Not Applicable
Securities to be registered under Section 12(g) of the Act:
Common Stock
(Title of class)
EXHIBIT INDEX
Exhibit Page Number in
No. Document Sequentially Numbered System
EX-3.(i) Articles of Incorporation
EX-3.(ii) Bylaws
EX-3.(iii) Specimen Stock Certificate
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PART I
Item 1. Description of Business.
General
The Company was incorporated under the laws of the State of Colorado on
December 2, 1993, and is in the early developmental and promotional stages. To
date the Company's activities have been organizational ones, directed at
developing its business plan and raising its initial capital. For the period of
1994 through 1996, the company had minimal revenues from consulting services as
to methods of obtaining financing debt and equity for client businesses in the
start-up stage. The Company has no commercial operations as of date hereof. The
Company has no full-time employees and owns no real estate.
The Company's current business plan is to seek, investigate, and, if
warranted, acquire one or more properties or businesses, and to pursue other
related activities intended to enhance shareholder value. The acquisition of a
business opportunity may be made by purchase, merger, exchange of stock, or
otherwise, and may encompass assets or a business entity, such as a corporation,
joint venture, or partnership. The Company has very limited capital, and it is
unlikely that the Company will be able to take advantage of more than one such
business opportunity. The Company intends to seek opportunities demonstrating
the potential of long-term growth as opposed to short-term earnings.
At the present time the Company has not identified any business
opportunity that it plans to pursue, nor has the Company reached any agreement
or definitive understanding with any person concerning an acquisition.
It is anticipated that the Company's officers and directors will contact
broker-dealers and other persons with whom they are acquainted who are involved
in corporate finance matters to advise them of the Company's existence and to
determine if any companies or businesses they represent have an interest in
considering a merger or acquisition with the Company. No assurance can be given
that the Company will be successful in finding or acquiring a desirable business
opportunity, given that no funds that are available for acquisitions, or that
any acquisition that occurs will be on terms that are favorable to the Company
or its stockholders.
The Company's search will be directed toward small and medium-sized
enterprises which have a desire to become public corporations and which are able
to satisfy, or anticipate in the reasonably near future being able to satisfy,
the minimum asset requirements in order to qualify shares for trading on NASDAQ
or a stock exchange (See "Investigation and Selection of Business
Opportunities"). The Company anticipates that the business opportunities
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presented to it will (i) be recently organized with no operating history, or a
history of losses attributable to under-capitalization or other factors; (ii) be
experiencing financial or operating difficulties; (iii) be in need of funds to
develop a new product or service or to expand into a new market; (iv) be relying
upon an untested product or marketing concept; or (v) have a combination of the
characteristics mentioned in (i) through (iv). The Company intends to
concentrate its acquisition efforts on properties or businesses that it believes
to be undervalued. Given the above factors, investors should expect that any
acquisition candidate may have a history of losses or low profitability.
The Company does not propose to restrict its search for investment
opportunities to any particular geographical area or industry, and may,
therefore, engage in essentially any business, to the extent of its limited
resources. This includes industries such as service, finance, natural resources,
manufacturing, high technology, product development, medical, communications and
others. The Company's discretion in the selection of business opportunities is
unrestricted, subject to the availability of such opportunities, economic
conditions, and other factors.
As a consequence of this registration of its securities, any entity
which has an interest in being acquired by, or merging into the Company, is
expected to be an entity that desires to become a public company and establish a
public trading market for its securities. In connection with such a merger or
acquisition, it is highly likely that an amount of stock constituting control of
the Company would be issued by the Company or purchased from the current
principal shareholders of the Company by the acquiring entity or its affiliates.
If stock is purchased from the current shareholders, the transaction is very
likely to result in substantial gains to them relative to their purchase price
for such stock. In the Company's judgment, none of its officers and directors
would thereby become an "underwriter" within the meaning of the Section 2(11) of
the Securities Act of 1933, as amended. The sale of a controlling interest by
certain principal shareholders of the Company could occur at a time when the
other shareholders of the Company remain subject to restrictions on the transfer
of their shares.
Depending upon the nature of the transaction, the current officers and
directors of the Company may resign management positions with the Company in
connection with the Company's acquisition of a business opportunity. See "Form
of Acquisition," below, and "Risk Factors - The Company - Lack of Continuity in
Management." In the event of such a resignation, the Company's current
management would not have any control over the conduct of the Company's business
following the Company's combination with a business opportunity.
It is anticipated that business opportunities will come to the Company's
attention from various sources, including its officer and director, its other
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stockholders, professional advisors such as attorneys and accountants,
securities broker-dealers, venture capitalists, members of the financial
community, and others who may present unsolicited proposals. The Company has no
plans, understandings, agreements, or commitments with any individual for such
person to act as a finder of opportunities for the Company.
The Company does not foresee that it would enter into a merger or
acquisition transaction with any business with which its sole officer or
director is currently affiliated. Should the Company determine in the future,
contrary to foregoing expectations, that a transaction with an affiliate would
be in the best interests of the Company and its stockholders, the Company is in
general permitted by Colorado law to enter into such a transaction if:
1. The material facts as to the relationship or interest of the affiliate and as
to the contract or transaction are disclosed or are known to the Board of
Directors, and the Board in good faith authorizes the contract or transaction by
the affirmative vote of a majority of the disinterested directors, even though
the disinterested directors constitute less than a quorum; or
2. The material facts as to the relationship or interest of the affiliate and as
to the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or
3. The contract or transaction is fair as to the Company as of the time it is
authorized, approved or ratified, by the Board of Directors or the stockholders.
Investigation and Selection of Business Opportunities
To a large extent, a decision to participate in a specific business opportunity
may be made upon management's analysis of the quality of the other company's
management and personnel, the anticipated acceptability of new products or
marketing concepts, the merit of technological changes, the perceived benefit
the company will derive from becoming a publicly held entity, and numerous other
factors which are difficult, if not impossible, to analyze through the
application of any objective criteria. In many instances, it is anticipated that
the historical operations of a specific business opportunity may not necessarily
be indicative of the potential for the future because of the possible need to
shift marketing approaches substantially, expand significantly, change product
emphasis, change or substantially augment management, or make other changes. The
Company will be dependent upon the owners of a business opportunity to identify
any such problems which may exist and to implement, or be primarily responsible
for the implementation of, required changes. Because the Company may participate
in a business opportunity with a newly organized firm or with a firm which is
entering a new phase of growth, it should be emphasized that the Company will
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incur further risks, because management in many instances will not have proved
its abilities or effectiveness, the eventual market for such company's products
or services will likely not be established, and such company may not be
profitable when acquired.
It is anticipated that the Company will not be able to diversify, but will
essentially be limited to one such venture because of the Company's limited
financing. This lack of diversification will not permit the Company to offset
potential losses from one business opportunity against profits from another, and
should be considered an adverse factor affecting any decision to purchase the
Company's securities.
It is emphasized that management of the Company may effect
transactions having a potentially adverse impact upon the Company's shareholders
pursuant to the authority and discretion of the Company's management to complete
acquisitions without submitting any proposal to the stockholders for their
consideration. Holders of the Company's securities should not anticipate that
the Company necessarily will furnish such holders, prior to any merger or
acquisition, with financial statements, or any other documentation, concerning a
target company or its business. In some instances, however, the proposed
participation in a business opportunity may be submitted to the stockholders for
their consideration, either voluntarily by such directors to seek the
stockholders' advice and consent or because state law so requires.
The analysis of business opportunities will be undertaken by or under the
supervision of the Company's President, who is not a professional business
analyst. See "Management." Although there are no current plans to do so, Company
management might hire an outside consultant to assist in the investigation and
selection of business opportunities, and might pay a finder's fee. Since Company
management has no current plans to use any outside consultants or advisors to
assist in the investigation and selection of business opportunities, no policies
have been adopted regarding use of such consultants or advisors, the criteria to
be used in selecting such consultants or advisors, the services to be provided,
the term of service, or regarding the total amount of fees that may be paid.
However, because of the limited resources of the Company, it is likely that any
such fee the Company agrees to pay would be paid in stock and not in cash.
Otherwise, the Company anticipates that it will consider, among other things,
the following factors:
1. Potential for growth and profitability, indicated by new technology,
anticipated market expansion, or new products;
2. The Company's perception of how any particular business opportunity will be
received by the investment community and by the Company's stockholders;
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3. Whether, following the business combination, the financial condition of the
business opportunity would be, or would have a significant prospect in the
foreseeable future of becoming sufficient to enable the securities of the
Company to qualify for listing on an exchange or on a national automated
securities quotation system, such as NASDAQ, so as to permit the trading of such
securities to be exempt from the requirements of Rule 15c2-6 recently adopted by
the Securities and Exchange Commission. See "Risk Factors - The Company
Regulation of Penny Stocks."
4. Capital requirements and anticipated availability of required funds, to be
provided by the Company or from operations, through the sale of additional
securities, through joint ventures or similar arrangements, or from other
sources;
5. The extent to which the business opportunity can be advanced;
6. Competitive position as compared to other companies of similar size and
experience within the industry segment as well as within the industry as a
whole;
7. Strength and diversity of existing management, or management prospects that
are scheduled for recruitment;
8. The cost of participation by the Company as compared to the perceived
tangible and intangible values and potential; and
9. The accessibility of required management expertise, personnel, raw materials,
services, professional assistance, and other required items.
Current NASDAQ "Small Cap" listing requirements are:
a) Net Tangible Assets $ 4,000,000
---
or
Market Capitalization $50,000,000
or
Net Income $ 750,000
(in latest fiscal year or
2 of last 3 fiscal years
b) Public Float (shares) 1,000,000
c) Market Value of Public $ 5,000,000
d) Minimum Bid Price $ 4.00
e) Market Makers 3
f) Shareholders - (round lots) 300
g) Market History 1 Year
h) Corporate Governance -
Standards Yes
Many, and perhaps most, of the business opportunities that might be
potential candidates for a combination with the Company would not satisfy the
NASDAQ listing criteria.
No one of the factors described above will be controlling in the
selection of a business opportunity, and management will attempt to analyze all
factors appropriate to each opportunity and make a determination based upon
reasonable investigative measures and available data. Potentially available
business opportunities may occur in many different industries and at various
stages of development, all of which will make the task of comparative
investigation and analysis of such business opportunities extremely difficult
and complex. Potential investors must recognize that, because of the Company's
limited capital available for investigation and management's limited experience
in business analysis, the Company may not discover or adequately evaluate
adverse facts about the opportunity to be acquired.
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The Company is unable to predict when it may participate in a business
opportunity. It expects, however, that the analysis of specific proposals and
the selection of a business opportunity may take several months or more.
Prior to making a decision to participate in a business opportunity, the
Company will generally request that it be provided with written materials
regarding the business opportunity containing such items as a description of
products, services and company history; management resumes; financial
information; available projections, with related assumptions upon which they are
based; an explanation of proprietary products and services; evidence of existing
patents, trademarks, or services marks, or rights thereto; present and proposed
forms of compensation to management; a description of trans- actions between
such company and its affiliates during relevant periods; a description of
present and required facilities; an analysis of risks and competitive
conditions; a financial plan of operation and estimated capital requirements;
audited financial statements, or if they are not available, unaudited financial
statements, together with reasonable assurances that audited financial
statements would be able to be produced within a reasonable period of time not
to exceed 60 days following completion of a merger transaction; and other
information deemed relevant.
As part of the Company's investigation, the Company's executive officers
and directors may meet personally with management and key personnel, may visit
and inspect material facilities, obtain independent analysis or verification of
certain information provided, check references of management and key personnel,
and take other reasonable investigative measures, to the extent of the Company's
limited financial resources and management expertise.
It is possible that the range of business opportunities that might be
available for consideration by the Company could be limited by the impact of
Securities and Exchange Commission regulations regarding purchase and sale of
"penny stocks." The regulations would affect, and possibly impair, any market
that might develop in the Company's securities until such time as they qualify
for listing on NASDAQ or on another exchange which would make them exempt from
applicability of the "penny stock" regulations. See "Risk Factors -- Regulation
of Penny Stocks."
Company management believes that various types of potential merger or
acquisition candidates might find a business combination with the Company to be
attractive. These include acquisition candidates desiring to create a public
market for their shares in order to enhance liquidity for current shareholders,
acquisition candidates which have long-term plans for raising capital through
the public sale of securities and believe that the possible prior existence of a
public market for their securities would be beneficial, and acquisition
candidates which plan to acquire additional assets through
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issuance of securities rather than for cash, and believe that the possibility of
development of a public market for their securities will be of assistance in
that process. Acquisition candidates which have a need for an immediate cash
infusion are not likely to find a potential business combination with the
Company to be an attractive alternative.
Form of Acquisition
It is impossible to predict the manner in which the Company may participate
in a business opportunity. Specific business opportunities will be reviewed as
well as the respective needs and desires of the Company and the promoters of the
opportunity and, upon the basis of that review and the relative negotiating
strength of the Company and such promoters, the legal structure or method deemed
by management to be suitable will be selected. Such structure may include, but
is not limited to leases, purchase and sale agreements, licenses, joint ventures
and other contractual arrangements. The Company may act directly or indirectly
through an interest in a partnership, corporation or other form of organization.
Implementing such structure may require the merger, consolidation or
reorganization of the Company with other corporations or forms of business
organization, and although it is likely, there is no assurance that the Company
would be the surviving entity. In addition, the present management and
stockholders of the Company most likely will not have control of a majority of
the voting shares of the Company following a reorganization transaction. As part
of such a transaction, the Company's existing directors may resign and new
directors may be appointed without any vote by stockholders.
It is likely that the Company will acquire its participation in a business
opportunity through the issuance of Common Stock or other securities of the
Company. Although the terms of any such transaction cannot be predicted, it
should be noted that in certain circumstances the criteria for determining
whether or not an acquisition is a so-called "tax free" re- organization under
the Internal Revenue Code of 1986, depends upon the issuance to the stockholders
of the acquired company of a controlling interest (i.e. 80% or more) of the
common stock of the combined entities immediately following the reorganization.
If a transaction were structured to take advantage of these provisions rather
than other "tax free" provisions provided under the Internal Revenue Code, the
Company's current stockholders would retain in the aggregate 20% or less of the
total issued and outstanding shares. This could result in substantial additional
dilution in the equity of those who were stockholders of the Company prior to
such reorganization. Any such issuance of additional shares might also be done
simultaneously with a sale or transfer of shares representing a controlling
interest in the Company by the current officers, directors and principal
shareholders. (See "Description of Business - General").
It is anticipated that any new securities issued in any reorganization
would be issued in reliance upon exemptions, if any are available, from
registration under applicable federal and state securities laws. In some
circumstances, however, as a negotiated element of the transaction, the Company
may agree to register such securities either at the time the transaction is
consummated, or under certain conditions or at specified times thereafter. The
issuance of substantial additional securities and their potential sale into any
trading market that might develop in the Company's securities may have a
depressive effect upon such market.
The Company will participate in a business opportunity only after the
negotiation and execution of a written agreement. Although the terms of such
agreement cannot be predicted, generally such an agreement would require
specific representations and warranties by all of the parties thereto, specify
certain events of default, detail the terms of closing and the conditions which
must be satisfied by each of the parties thereto prior to such closing, outline
the manner of bearing costs if the transaction is not closed, set forth remedies
upon default, and include miscellaneous other terms.
As a general matter, the Company anticipates that it, and/or its officers
and principal shareholders will enter into a letter of intent with the
management, principals or owners of a prospective business opportunity prior to
signing a binding agreement. Such a letter of intent will set forth the terms of
the proposed acquisition but will not bind any of the parties to consummate the
transaction. Execution of a letter of intent will by no means indicate that
consummation of an acquisition is probable. Neither the Company nor any of the
other parties to the letter of intent will be bound to consummate the
acquisition unless and until a definitive agreement concerning the ac-quisition
as described in the preceding paragraph is executed. Even after a definitive
agreement is executed, it is possible that the acquisition would not be
consummated should any party elect to exercise any right provided in the
agreement to terminate it on specified grounds.
It is anticipated that the investigation of specific business opportunities
and the negotiation, drafting and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and
attention and substantial costs for accountants, attorneys and others. If a
decision is made not to participate in a specific business opportunity, the
costs theretofore incurred in the related investigation would not be
recoverable. Moreover, because many providers of goods and services require
compensation at the time or soon after the goods and services are provided, the
inability of the Company to pay until an indeterminate future time may make it
impossible to procure goods and services.
<PAGE>
Investment Company Act and Other Regulation
The Company may participate in a business opportunity by purchasing,
trading or selling the securities of such business. The Company does not,
however, intend to engage primarily in such activities. Specifically, the
Company intends to conduct its activities so as to avoid being classified as an
"investment company" under the Investment Company Act of 1940 (the "Investment
Act"), and therefore to avoid application of the costly and restrictive
registration and other provisions of the Investment Act, and the regulations
promulgated thereunder.
Section 3(a) of the Investment Act contains the definition of an
"investment company," and it excludes any entity that does not engage primarily
in the business of investing, reinvesting or trading in securities, or that does
not engage in the business of investing, owning, holding or trading "investment
securities" (defined as "all securities other than government securities or
securities of majority-owned subsidiaries") the value of which exceeds 40% of
the value of its total assets (excluding government securities, cash or cash
items). The Company intends to implement its business plan in a manner which
will result in the availability of this exception from the definition of
"investment company." Consequently, the Company's participation in a business or
opportunity through the purchase and sale of investment securities will be
limited.
The Company's plan of business may involve changes in its capital
structure, management, control and business, especially if it consummates a
reorganization as discussed above. Each of these areas is regulated by the
Investment Act, in order to protect purchasers of investment company securities.
Since the Company will not register as an investment company, stockholders will
not be afforded these protections.
Any securities which the Company might acquire in exchange for its Common
Stock are expected to be "restricted securities" within the meaning of the
Securities Act of 1933, as amended (the "Act"). If the Company elects to resell
such securities, such sale cannot proceed unless a registration statement has
been declared effective by the Securities and Exchange Commission or an
exemption from registration is available. Section 4(1) of the Act, which exempts
sales of securities not involving a distribution, would in all likelihood be
available to permit a private sale. Although the plan of operation does not
contemplate resale of securities acquired, if such a sale were to be necessary,
the Company would be required to comply with the provisions of the Act to effect
such resale.
An acquisition made by the Company may be in an industry which is regulated
or licensed by federal, state or local authorities. Compliance with such
regulations can be expected to be a time-consuming and expensive process.
<PAGE>
Competition
The Company expects to encounter substantial competition in its efforts to
locate attractive opportunities, primarily from business development companies,
venture capital partnerships and corporations, venture capital affiliates of
large industrial and financial companies, small investment companies, and
wealthy individuals. Many of these entities will have significantly greater
experience, resources and managerial capabilities than the Company and will
therefore be in a better position than the Company to obtain access to
attractive business opportunities. The Company also will experience competition
from other public "blind pool" companies, many of which may have more funds
available than does the Company.
Administrative Offices
The Company currently maintains a mailing address at 10200 W. 44th Avenue,
Suite 400, Wheat Ridge, Colorado 80033 which is the office address of its legal
counsel. The Company's telephone number is (303) 442-7674. Other than this
mailing address, the Company does not currently maintain any other office
facilities, and does not anticipate the need for maintaining office facilities
at any time in the foreseeable future. The Company pays no rent or other fees
for the use of this mailing address.
Employees
The Company is a development stage company and currently has no employees.
Management of the Company expects to use consultants, attorneys and accountants
as necessary, and does not anticipate a need to engage any full-time employees
so long as it is seeking and evaluating business opportunities. The need for
employees and their availability will be addressed in connection with the
decision whether or not to acquire or participate in specific business
opportunities. Although there is no current plan with respect to its nature or
amount, remuneration may be paid to or accrued for the benefit of, the Company's
officers prior to, or in conjunction with, the completion of a business
acquisition for services actually rendered, if for. See "Executive Compensation"
and under "Certain Relationships and Related Transactions."
Risk Factors
1. Conflicts of Interest. Certain conflicts of interest exist between the
Company and its officers and directors. They have other business interests to
which they devote their attention, and may be expected to continue to do so
although management time should be devoted to the business of the Company. As a
result, conflicts of interest may arise that can be resolved only through
exercise of such judgment as is consistent with fiduciary duties to the Company.
See "Management," and "Conflicts of Interest."
<PAGE>
It is anticipated that Company's officers and directors may actively
negotiate or otherwise consent to the purchase of a portion of their common
stock as a condition to, or in connection with, a proposed merger or acquisition
transaction. In this process, the Company's officers and directors may consider
his own personal pecuniary benefit rather than the best interests of other
Company shareholders, and the other Company shareholders are not expected to be
afforded the opportunity to approve or consent to any particular stock buy-out
transaction. See "Conflicts of Interest."
2. Need For Additional Financing. The Company has very limited funds, and such
funds may not be adequate to take advantage of any available business
opportunities. Even if the Company's funds prove to be sufficient to acquire an
interest in, or complete a transaction with, a business opportunity, the Company
may not have enough capital to exploit the opportunity. The ultimate success of
the Company may depend upon its ability to raise additional capital. The Company
has not investigated the availability, source, or terms that might govern the
acquisition of additional capital and will not do so until it determines a need
for additional financing. If additional capital is needed, there is no assurance
that funds will be available from any source or, if available, that they can be
obtained on terms acceptable to the Company. If not available, the Company's
operations will be limited to those that can be financed with its modest
capital.
3. Regulation of Penny Stocks. The Company's securities, when available for
trading, will be subject to a Securities and Exchange Commission rule that
imposes special sales practice requirements upon broker-dealers who sell such
securities to persons other than established customers or accredited investors.
For purposes of the rule, the phrase "accredited investors" means, in general
terms, institutions with assets in excess of $5,000,000, or individuals having a
net worth in excess of $1,000,000 or having an annual income that exceeds
$200,000 (or that, when combined with a spouse's income, exceeds $300,000). For
transactions covered by the rule, the broker-dealer must make a special
suitability determination for the purchaser and receive the purchaser's written
agreement to the transaction prior to the sale. Consequently, the rule may
affect the ability of broker-dealers to sell the Company's securities and also
may affect the ability of purchasers in this offering to sell their securities
in any market that might develop therefore.
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1, 15g-2,
15g-3, 15g-4, 15g-5, 15g-6, and 15g-7 under the Securities Exchange Act of 1934,
as amended. Because the securities of the Company may constitute "penny stocks"
within the meaning of the rules, the rules would apply to the Company and to its
securities. The rules may further affect the ability of owners of Shares to sell
the securities of the Company in any market that might develop for them.
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Shareholders should be aware that, according to Securities and Exchange
Commission Release No. 34-29093, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse. Such patterns include (i) control
of the market for the security by one or a few broker-dealers that are often
related to the promoter or issuer; (ii) manipulation of prices through
prearranged matching of purchases and sales and false and misleading press
releases; (iii) "boiler room" practices involving high-pressure sales tactics
and unrealistic price projections by inexperienced sales persons; (iv) excessive
and undisclosed bid-ask differentials and markups by selling broker-dealers; and
(v) the wholesale dumping of the same securities by promoters and broker-dealers
after prices have been manipulated to a desired level, along with the resulting
inevitable collapse of those prices and with consequent investor losses. The
Company's management is aware of the abuses that have occurred historically in
the penny stock market. Although the Company does not expect to be in a position
to dictate the behavior of the market or of broker-dealers who participate in
the market, management will strive within the confines of practical limitations
to prevent the described patterns from being established with respect to the
Company's securities.
4. Lack of Operating History. The Company was formed in December, 1993 for the
purpose of registering a common stock offering under the 1933 Act and engaging
in consulting services for clients as to methods to obtain debt or equity
financing for start-up companies. Although some minimal revenues were achieved
in the period 1994-1996, such were not significant, the Company was not
profitable and the business failed. The Company has no successful operating
history, revenues from operations, or assets. The Company faces all of the risks
of a new business and the special risks inherent in the investigation,
acquisition, or involvement in a new business opportunity. The Company must be
regarded as a new or "start-up" venture with all of the unforeseen costs,
expenses, problems, and difficulties to which such ventures are subject.
5. No Assurance of Success or Profitability. There is no assurance that the
Company will acquire a favorable business op portunity. Even if the Company
should become involved in a business opportunity, there is no assurance that it
will generate revenues or profits, or that the market price of the Company's
Common Stock will be increased thereby.
6. Possible Business - Not Identified and Highly Risky. The Company has not
identified and has no commitments to enter into or acquire a specific business
opportunity and therefore can disclose the risks and hazards of a business or
opportunity that it may enter into in only a general manner, and cannot disclose
the risks and hazards of any specific business or opportunity that it may enter
into. An investor can expect a potential business opportunity to be quite risky.
The Company's acquisition of or participation in a business opportunity will
likely be highly illiquid and could result in a total loss to the Company and
its stockholders if the business or opportunity proves to be unsuccessful. See
Item 1 "Description of Business."
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7. Type of Business Acquired. The type of business to be acquired may be one
that desires to avoid effecting its own public offering and the accompanying
expense, delays, uncertainties, and federal and state requirements which purport
to protect investors. Because of the Company's limited capital, it is more
likely than not that any acquisition by the Company will involve other parties
whose primary interest is the acquisition of control of a publicly traded
company. Moreover, any business opportunity acquired may be currently
unprofitable or present other negative factors.
8. Impracticability of Exhaustive Investigation. The Company's limited funds and
the lack of full-time management will likely make it impracticable to conduct a
complete and exhaustive investigation and analysis of a business opportunity
before the Company commits its capital or other resources thereto. Management
decisions, therefore, will likely be made without detailed feasibility studies,
independent analysis, market surveys and the like which, if the Company had more
funds available to it, would be desirable. The Company will be particularly
dependent in making decisions upon information provided by the promoter, owner,
sponsor, or others associated with the business opportunity seeking the
Company's participation. A significant portion of the Company's available funds
may be expended for investigative expenses and other expenses related to
preliminary aspects of completing an acquisition transaction, whether or not any
business opportunity investigated is eventually acquired.
9. Lack of Diversification. Because of the limited financial resources that the
Company has, it is unlikely that the Company will be able to diversify its
acquisitions or operations. The Company's probable inability to diversify its
activities into more than one area will subject the Company to economic
fluctuations within a particular business or industry and therefore increase the
risks associated with the Company's operations.
10. Possible Reliance upon Unaudited Financial Statements. The Company generally
will require audited financial statements from companies that it proposes to
acquire. No assurance can be given, however, that audited financials will be
available to the Company. In cases where audited financials are unavailable, the
Company will have to rely upon unaudited information received from target
companies' management that has not been verified by outside auditors. The lack
of the type of independent verification which audited financial statements would
provide, increases the risk that the Company, in evaluating an acquisition with
such a target company, will not have the benefit of full and accurate
information about the financial condition and operating history of the target
company. This risk increases the prospect that the acquisition of such a company
might prove to be an unfavorable one for the Company or the holders of the
Company's securities.
<PAGE>
Moreover, the Company will be subject to the reporting provisions of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and thus will
be required to furnish certain information about significant acquisitions,
including audited financial statements for any business that it acquires.
Consequently, acquisition prospects that do not have, or are unable to provide
reasonable assurances that they will be able to obtain, the required audited
statements would not be considered by the Company to be appropriate for
acquisition so long as the reporting requirements of the Exchange Act are
applicable. Should the Company, during the time it remains subject to the
reporting provisions of the Exchange Act, complete an acquisition of an entity
for which audited financial statements prove to be unobtainable, the Company
would be exposed to enforcement actions by the Securities and Exchange
Commission (the "Commission") and to corresponding administrative sanctions,
including permanent injunctions against the Company and its management. The
legal and other costs of defending a Commission enforcement action would have
material, adverse consequences for the Company and its business. The imposition
of administrative sanctions would subject the Company to further adverse
consequences.
In addition, the lack of audited financial statements would prevent the
securities of the Company from becoming eligible for listing on NASDAQ, or on
any existing stock exchange. Moreover, the lack of such financial statements is
likely to discourage broker-dealers from becoming or continuing to serve as
market makers in the securities of the Company. Without audited financial
statements, the Company would almost certainly be unable to offer securities
under a registration statement pursuant to the Securities Act of 1933, and the
ability of the Company to raise capital would be significantly limited until
such financial statements were to become available.
11. Other Regulation. An acquisition made by the Company may be of a business
that is subject to regulation or licensing by federal, state, or local
authorities. Compliance with such regulations and licensing can be expected to
be a time-consuming, expensive process and may limit other investment
opportunities of the Company.
12. Dependence upon Management; Limited Participation of Management. The Company
currently has a single individual who is serving as its sole officer and
director. The Company will be heavily dependent upon his skills, talents, and
abilities to implement its business plan, and may, from time to time, find that
the inability of the sole officer and director to devote his full time attention
to the business of the Company results in a delay in progress toward
implementing its business plan. Furthermore, since one individual is serving as
the sole officer and director of the Company, it will be entirely dependent upon
his experience in seeking, investigating, and acquiring a business and in making
decisions regarding the Company's operations. See "Management." Because
investors will not be able to evaluate the merits of possible business
acquisitions by the Company, they should critically assess the information
concerning the Company's sole officer and director.
<PAGE>
13. Lack of Continuity in Management. The Company does not have an employment
agreement with its officers and directors, and as a result, there is no
assurance that they will continue to manage the Company in the future. In
connection with acquisition of a business opportunity, it is likely the current
officers and directors of the Company may resign. A decision to resign will be
based upon the identity of the business opportunity and the nature of the
transaction, and is likely to occur without the vote or consent of the
stockholders of the Company.
14. Indemnification of Officers and Directors. The Company's Articles of
Incorporation provide for the indemnification of its directors, officers,
employees, and agents, under certain circumstances, against attorney's fees and
other expenses incurred by them in any litigation to which they become a party
arising from their association with or activities on behalf of the Company. The
Company will also bear the expenses of such litigation for any of its directors,
officers, employees, or agents, upon such person's promise to repay the Company
therefor if it is ultimately determined that any such person shall not have been
entitled to indemnification. This indemnification policy could result in
substantial expenditures by the Company which it will be unable to recoup.
15. Director's Liability Limited. The Company's Articles of Incorporation
exclude personal liability of its directors to the Company and its stockholders
for monetary damages for breach of fiduciary duty except in certain specified
circumstances. Accordingly, the Company will have a much more limited right of
action against its directors than otherwise would be the case. This provision
does not affect the liability of any director under federal or applicable state
securities laws.
16. Dependence upon Outside Advisors. To supplement the business experience of
its sole officer and director, the Company may be required to employ
accountants, technical experts, appraisers, attorneys, or other consultants or
advisors. The selection of any such advisors will be made by the Company's
President without any input from stockholders. Furthermore, it is anticipated
that such persons may be engaged on an "as needed" basis without a continuing
fiduciary or other obligation to the Company. In the event the President of the
Company considers it necessary to hire outside advisors, he may elect to hire
persons who are affiliates, if they are able to provide the required services.
17. Leveraged Transactions. There is a possibility that any acquisition of a
business opportunity by the Company may be leveraged, i.e., the Company may
finance the acquisition of the business opportunity by borrowing against the
assets of the business opportunity to be acquired, or against the projected
<PAGE>
future revenues or profits of the business opportunity. This could increase the
Company's exposure to larger losses. A business opportunity acquired through a
leveraged transaction is profitable only if it generates enough revenues to
cover the related debt and expenses. Failure to make payments on the debt
incurred to purchase the business opportunity could result in the loss of a
portion or all of the assets acquired. There is no assurance that any business
opportunity acquired through a leveraged transaction will generate sufficient
revenues to cover the related debt and expenses.
18. Competition. The search for potentially profitable business opportunities is
intensely competitive. The Company expects to be at a disadvantage when
competing with many firms that have substantially greater financial and
management resources and capabilities than the Company. These competitive
conditions will exist in any industry in which the Company may become
interested.
19. No Foreseeable Dividends. The Company has not paid dividends on its Common
Stock and does not anticipate paying such dividends in the foreseeable future.
20. Loss of Control by Present Management and Stockholders. The Company may
consider an acquisition in which the Company would issue as consideration for
the business opportunity to be acquired an amount of the Company's authorized
but unissued Common Stock that would, upon issuance, represent the great
majority of the voting power and equity of the Company. The result of such an
acquisition would be that the acquired company's stockholders and management
would control the Company, and the Company's management could be replaced by
persons unknown at this time. Such a merger would result in a greatly reduced
percentage of ownership of the Company by its current shareholders. In addition,
the Company's officers and directors could sell their control block of stock at
a premium price to the acquired company's stockholders.
21. No Public Market Exists. There is no public market for the Company's common
stock, and no assurance can be given that a market will develop or that a
shareholder ever will be able to liquidate his investment without considerable
delay, if at all. If a market should develop, the price may be highly volatile.
Factors such as those discussed in this "Risk Factors" section may have a
significant impact upon the market price of the securities offered hereby. Owing
to the low price of the securities, many brokerage firms may not be willing to
effect transactions in the securities. Even if a purchaser finds a broker
willing to effect a transaction in these securities, the combination of
brokerage commissions, state transfer taxes, if any, and any other selling costs
may exceed the selling price. Further, many lending institutions will not permit
the use of such securities as collateral for any loans.
22. Rule 144 Sales. All of the outstanding shares of Common Stock held by
present stockholders are "restricted securities" within the meaning of Rule 144
under the Securities Act of 1933, as amended. As restricted
<PAGE>
shares, these shares may be resold only pursuant to an effective registration
statement or under the requirements of Rule 144 or other applicable exemptions
from registration under the Act and as required under applicable state
securities laws. Rule 144 provides in essence that a person who has held
restricted securities for a prescribed period may, under certain conditions,
sell every three months, in brokerage transactions, a number of shares that does
not exceed the greater of 1.0% of a company's outstanding common stock or the
average weekly trading volume during the four calendar weeks prior to the sale.
There is no limit on the amount of restricted securities that may be sold by a
nonaffiliate after the restricted securities have been held by the owner for a
period of two years. A sale under Rule 144 or under any other exemption from the
Act, if available, or pursuant to subsequent registrations of shares of Common
Stock of present stockholders, may have a depressive effect upon the price of
the Common Stock in any market that may develop. Of the total 1,442,028 shares
of common stock held by present stockholders of the Company all shares will
become available for resale under Rule 144 ninety (90) days after the Company
registers its common stock under Section 12(g) of the Securities and Exchange
Commission, all of which will be subject to applicable volume restrictions under
the Rule.
23. Blue Sky Considerations. Because the securities registered hereunder have
not been registered for resale under the blue sky laws of any state, the holders
of such shares and persons who desire to purchase them in any trading market
that might develop in the future, should be aware that there may be significant
state blue-sky law restrictions upon the ability of investors to sell the
securities and of purchasers to purchase the securities. Some jurisdictions may
not under any circumstances allow the trading or resale of blind-pool or
"blank-check" securities. Accordingly, investors should consider the secondary
market for the Company's securities to be a limited one.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATIONS.
Liquidity and Capital Resources
The Company remains in the development stage and, since inception, has
experienced significant liquidity problems and has no capital resources or
stockholder's equity proceeds in the amount of $8,250, from its inside
capitalization funds. Consequently, the Company has current assets of $ 0 in the
form of cash, and total assets of $250 and has current liabilities of $62,086
for debts incurred in registration attempts and business consulting. Its debts
exceed its assets by $61,000.
The Company will carry out its plan of business as discussed above. The
Company cannot predict to what extent its liquidity and capital resources will
be diminished prior to the consummation of a business combination or whether its
capital will be further depleted by the operating losses (if any) of the
business entity which the Company may eventually acquire.
<PAGE>
Results of Operations
During the period from December 21, 1993 (inception) through December 31,
1998, the Company has engaged in no significant operations other than
organizational activities, acquisition of capital and preparation for
registration of its securities under the Securities Act of 1933, as amended and
a limited venture into offering consulting services to clients seeking debt or
equity financing for start-up ventures. Minimal revenues were received by the
Company during this period, totaling $5,000 in 1997 and $ 0 in 1996. The company
has incurred operating expenses since inception of $131,340 and revenues of only
$8,000. The net loss on operations ($123,343) through Dec. 31, 1997. Such losses
will continue unless revenues and business can be acquired by the company. There
is no appearance that revenues or profitability will ever be achieved by the
company.
For the current fiscal year, the Company anticipates incurring a loss as a
result of legal and accounting expenses, expenses associated with registration
under the Securities Exchange Act of 1934, and expenses associated with locating
and evaluating acquisition candidates. The Company anticipates that until a
business combination is completed with an acquisition candidate, it will not
generate revenues other than interest income, and may continue to operate at a
loss after completing a business combination, depending upon the performance of
the acquired business.
Need for Additional Financing
The Company knows that its existing capital will not be sufficient to meet
the Company's cash needs, including the costs of compliance with the continuing
reporting requirements of the Securities Exchange Act of 1934. The Company will
have to seek loans or equity placements to cover such cash needs. In the event
the Company is able to complete a business combination during this period, lack
of its existing capital will be a sufficient impediment to allow it to
accomplish the goal of completing a business combination. There is no assurance,
however, that the available funds will ultimately prove to be adequate to allow
it to complete a business combination, and once a business combination is
completed, the Company's needs for additional financing are likely to increase
substantially.
No commitments to provide additional funds have been made by management or
other stockholders. Accordingly, there can be no assurance that any additional
funds will be available to the Company to allow it to cover its expenses.
Irrespective of whether the Company's cash assets prove to be inadequate to
meet the Company's operational needs, the Company might seek to compensate
providers of services by issuances of stock in lieu of cash. For information as
to the Company's policy in regard to payment for consulting services, see
"Certain Relationships and Transactions."
<PAGE>
Item 3. Description of Property. None
The Company does not currently maintain an office or any other facilities.
It does currently maintain a mailing address at 10200 W. 44th Avenue, Suite 400,
Wheat Ridge, Colorado 80033, which is the office address of its legal counsel.
The Company pays no rent for the use of this mailing address. The Company does
not believe that it will need to maintain an office at any time in the
foreseeable future in order to carry out its plan of operations described
herein. The Company's telephone number is (303) 442-7674.
Item 4. Security Ownership of Certain Beneficial Owners and
Management.
The following table sets forth, as of the date of this Registration
Statement, the number of shares of Common Stock owned of record and beneficially
by executive officers, directors and persons who hold 5.0% or more of the
outstanding Common Stock of the Company. Also included are the shares held by
all executive officers and directors as a group.
Name and Address Number of Ownership
Shares Percentage
Donald R. Schenkier, President & Director 333333 23%
555W. Peakview Avenue
Littleton, CO 80120
Gregory E. Boyd, Secretary & Treasurer 333334 23%
13105 Monaco Parkway #A
Denver, CO 80222
Te Huey Urich, Shareholder 342334 23.7%
83855 Cobblestone St.
Highlands Ranch, CO 80126
All directors and executive
officers as a group (2 persons) 666667 46%
Item 5. Directors, Executive Officers, Promoters and Control Persons.
The directors and executive officers currently serving the Company are
as follows:
Name Age Positions Held and Tenure
Donald R. Schenkier 49 President and Director
Gregory Boyd 43 Secretary and Director
The director named above will serve until the first annual meeting of the
Company's stockholders. Thereafter, directors will be elected for one-year terms
at the annual stockholders' meeting. Officers will hold their positions at the
pleasure of the board of directors, absent any employment agreement, of which
none currently exists or is contemplated. There is no arrangement or
understanding between the sole director and officer of the Company and any other
person pursuant to which any director or officer was or is to be selected as a
director or officer.
<PAGE>
The directors and officers of the Company will devote such time to the
Company's affairs on an "as needed" basis. As a result, the actual amount of
time which they will devote to the Company's affairs is unknown and is likely to
vary substantially from month to month.
Biographical Information
Gregory E. Boyd has served as the President, Treasurer, and a director
of the Company since its inception and he is currently secretary. He has been
the secretary and a director of Sole Track Group International, Inc., a Denver,
Colorado, entity engaged in marketing athletic shoes, apparel, and accessories
since September 1994. He has also been a director of Sole Track, Inc., Denver,
Colorado since October 1990 to March 1994, he was involved as a consultant with
Colorado Clearwater Company, Denver, Colorado which is engaged in the
manufacturing and distribution of water products. As of the date of this
Prospectus, Colorado Clearwater Company is still in operation. As a result of
these activities, Mr. Boyd has experience in organizing and capitalizing new
business and formulating business plans.
Donald R. Schenkier has been a director of the Company since June 1994
and President since 1996. He has been the treasurer and a director of Sole Track
Group International, Inc. since September 1994. He was a director of Sole Track,
Inc. from July 1992 to October 1992 and has been a director since April 1994.
From November 1975 to April 1994, he was the lead person in the
machine/welding/sheet metal/carpenter shops working on the design and
fabrication of prototype scientific equipment for the research center for
Marathon Oil Company in Littleton, Colorado. He worked for Sunmaster, Inc.,
Denver, Colorado from 1969 to October 19975 as the plant manager for operation
and production, supervising approximately 40 production employees. Sunmaster was
engaged in manufacturing interior decorating items. Mr. Schenkeir received a
bachelor's degree from Metropolitan State College of Denver in 1972.
Indemnification of Officers and Directors
As permitted by Colorado law, the Company's Articles of Incorp-oration
provide that the Company will indemnify its directors and officers against
expenses and liabilities they incur to defend, settle, or satisfy any civil or
criminal action brought against them on account of their being or having been
Company directors or officers unless, in any such action, they are adjudged to
have acted with gross negligence or willful misconduct. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers or persons controlling the Company pursuant to
the foregoing provisions, the Company has been informed that, in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in that Act and is, therefore, unenforceable.
<PAGE>
Exclusion of Liability
Pursuant to the Colorado Business Corporation Act, the Company's
Articles of Incorporation exclude personal liability for its directors for
monetary damages based upon any violation of their fiduciary duties as
directors, except as to liability for any breach of the duty of loyalty, acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, acts in violation of Section 7-106-401 of the Colorado
Business Corporation Act, or any transaction from which a director receives an
improper personal benefit. This exclusion of liability does not limit any right
which a director may have to be indemnified and does not affect any director's
liability under federal or applicable state securities laws.
Conflicts of Interest
The sole officer and director of the Company will not devote more than a
portion of his time to the affairs of the Company. There will be occasions when
the time requirements of the Company's business conflict with the demands of his
other business and investment activities. Such conflicts may require that the
Company attempt to employ additional personnel. There is no assurance that the
services of such persons will be available or that they can be obtained upon
terms favorable to the Company.
There is no procedure in place which would allow officers or directors
to resolve potential conflicts in an arms-length fashion. Accordingly, he will
be required to use his discretion to resolve them in a manner which he considers
appropriate.
The Company's sole officer and director may actively negotiate or
otherwise consent to the purchase of a portion of his common stock as a
condition to, or in connection with, a proposed merger or acquisition
transaction. It is anticipated that a substantial premium over the initial cost
of such shares may be paid by the purchaser in conjunction with any sale of
shares by the Company's officer and director which is made as a condition to, or
in connection with, a proposed merger or acquisition transaction. The fact that
a substantial premium may be paid to the Company's sole officer and director to
acquire his shares creates a potential conflict of interest for him in
satisfying his fiduciary duties to the Company and its other shareholders. Even
though such a sale could result in a substantial profit to him, he would be
legally required to make the decision based upon the best interests of the
Company and the Company's other shareholders, rather than his own personal
pecuniary benefit.
<PAGE>
Item 6. Executive Compensation.
SUMMARY COMPENSATION TABLE OF EXECUTIVES
----------------------------------------
Annual Compensation Awards
Name and Year Salary Bonus Other annual Restricted Secutities
Principal Compensation Stock Underlying
Position ($) Award (s) Options/
SARs (#)
1995 0 0 0 0 0
1996 0 0 0 0 0
1997 0 0 0 0 0
1995 0 0 0 0 0
1996 0 0 0 0 0
1997 0 0 0 0 0
1995 0 0 0 0 0
1996 0 0 0 0 0
1997 0 0 0 0 0
Name Cash Compensation Security Grants
Annual Meeting Consulting Number Number of
Retainer Fees Fees/Other of Secutities
Fees ($) ($) Fees ($) Shares Underlying
(#) Options/SARs (#)
A. Director 0 0 0 0 0
B. Director 0 0 0 0 0
C. Director 0 0 0 0 0
No officer or director has received any other remuneration in the two
year period prior to the filing of this registration statement. Although there
is no current plan in existence, it is possible that the Company will adopt a
plan to pay or accrue compensation to its sole officer and director for services
related to seeking business opportunities and completing a merger or acquisition
transaction. See "Certain Relationships and Related Transactions." The Company
has no stock option, retirement, pension, or profit-sharing programs for the
benefit of directors, officers or other employees, but the Board of Directors
may recommend adoption of one or more such programs in the future.
Item 7. Certain Relationships and Related Transactions.
Prior to the date of this Registration Statement, the Company issued to
its founders, officers, and directors, and to other shareholders, a total of
1,442,028 shares of Common Stock for a total of $2,057.00 in cash and $41,000 in
services. Certificates evidencing the Common Stock issued by the Company to
these persons have all been stamped with a restrictive legend, and are subject
to stop transfer orders by the Company. For additional information concerning
restrictions that are imposed upon the securities held by current stockholders,
and the responsibilities of such stockholders to comply with federal securities
laws in the disposition of such Common Stock, see "Risk Factors - Rule 144
Sales."
a. At the inception of the Company, December 2, 1993, and on March 31, 1994, the
Company issued 26,000 and 474,000 shares of its Common Stock each to Mark S.
Urich and Gregory E. Boyd for services rendered in organizing the Company. The
shares were valued at $.001 per share. Mr. Urich subsequently conveyed all but
1,000 of these shares to his wife. Mrs. Urich and Mr. Boyd later transferred
166,667 and 166,666 shares respectively to Donald R. Schenkier, a director of
the Company.
b. In March 1994, Mark S. Urich, an officer, director, and principal sharehoder
of the Company, loaned the Company a total of $79,000. Mr. Urich was repaid in
1994 without interest. The Company had anticipated participating in a business
opportunity in March 1994. The transaction never took place and the Company then
repaid Mr. Urich.
c. In August 1994, the Company advanced $2,340 to Sole Track Group
International, Inc., a company of which Messrs. Boyd, Urich, and Schenkier are
offices, directors, and principal shareholders.
d. In August 1994,, the company borrowed $17,870 from Sole Track, Inc. a company
of which Messrs, Boyd and Schenkier were officers, directors and principal
shareholders. In October 1994, a partial repayment of $382 was made. As of
February 28, 1995, $17,488 was owed. This obligation is non-interest bearing and
unsecured.
<PAGE>
On September 15, 1994, the Company issued 10,000 shares of its Common
Stock to Dwayne DeSilvia in consideration of certain referrals and introductions
Mr. DeSilvia made for the benefit of the Company. These shares are being
registered in the registration statement of which this Prospectus is a part. See
"Selling Security Holders." For financial accounting purposes, the shares were
valued at $.25 per share since shares were sold for cash at approximately the
same time.
On September 21, 1994, G. Paul Music, a business controlled by Gregory
P. Bassett, an existing shareholder of the Company, loaned $10,000 to the
Company. The promissory note evidencing the loan accrues interest at the rate of
7% per annum, is unsecured, and was due May 31, 1995. In consideration for
making this loan, the Company issued 100,000 shares of its Common Stock to G.
Paul Music. These shares are being registered in the registration statement of
which this Prospectus is a part. See "Selling Security Holders." For financial
accounting purposes, the shares were valued at $.25 per share, since shares were
solf for cash at approximately the same time. While the shares are valued at
$25,000 for financial accounting purposes, such shares do not have that value to
G. Paul Music because they are not marketable. Accordingly, the $10,000 loan
from G. Paul Music was not discharged when the Company gave G. Paul Music
100,000 shares of its Common Stock in consideration for the loan.
No officer, director, promoter, or affiliate of the Company has or
proposes to have any direct or indirect material interest in any asset proposed
to be acquired by the Company through security holdings, contracts, options, or
otherwise.
The Company has adopted a policy under which any consulting or finder's
fee that may be paid to a third party for consulting services to assist
management in evaluating a prospective business opportunity would be paid in
stock or in cash. Any such issuance of stock would be made on an ad hoc basis.
Accordingly, the Company is unable to predict whether or in what amount such a
stock issuance might be made.
Although there is no current plan in existence, it is possible that the
Company will adopt a plan to pay or accrue compensation to its sole officer and
director for services related to seeking business opportunities and completing a
merger or acquisition transaction.
The Company maintains a mailing address at the office of its legal
counsel, but otherwise does not maintain an office. As a result, it pays no rent
and incurs no expenses for maintenance of an office and does not anticipate
paying rent or incurring office expenses in the future. It is likely that the
Company will establish and maintain an office after completion of a business
combination.
<PAGE>
Although management has no current plans to cause the Company to do so,
it is possible that the Company may enter into an agreement with an acquisition
candidate requiring the sale of all or a portion of the Common Stock held by the
Company's current stockholders to the acquisition candidate or principals
thereof, or to other individuals or business entities, or requiring some other
form of payment to the Company's current stockholders, or requiring the future
employment of specified officers and payment of salaries to them. It is more
likely than not that any sale of securities by the Company's current
stockholders to an acquisition candidate would be at a price substantially
higher than that originally paid by such stockholders. Any payment to current
stockholders in the context of an acquisition involving the Company would be
determined entirely by the largely unforeseeable terms of a future agreement
with an unidentified business entity.
Item 8. Description of Securities.
Common Stock
The Company's Articles of Incorporation authorize the issuance of
20,000,000 shares of Common Stock no par value. Each record holder of Common
Stock is entitled to one vote for each share held on all matters properly
submitted to the stockholders for their vote. Cumulative voting for the election
of directors is not permitted by the Articles of Incorporation.
Holders of outstanding shares of Common Stock are entitled to such
dividends as may be declared from time to time by the Board of Directors out of
legally available funds; and, in the event of liquidation, dissolution or
winding up of the affairs of the Company, holders are entitled to receive,
ratably, the net assets of the Company available to stockholders after
distribution is made to the preferred stockholders, if any, who are given
preferred rights upon liquidation. Holders of outstanding shares of Common Stock
have no preemptive, conversion or redemptive rights. All of the issued and
outstanding shares of Common Stock are, and all unissued shares when offered and
sold will be, duly authorized, validly issued, fully paid, and nonassessable. To
the extent that additional shares of the Company's Common Stock are issued, the
relative interests of then existing stockholders may be diluted.
Preferred Stock
The Company's Articles of Incorporation authorize the issuance of
5,000,000 shares of preferred stock. The Board of Directors of the Company is
authorized to issue the preferred stock from time to time in series and is
further authorized to establish such series, to fix and determine the variations
in the relative rights and preferences as between series, to fix voting rights,
if any, for each series, and to allow for the conversion of preferred stock into
Common Stock. No preferred stock has been issued by the Company. The Company
anticipates that preferred stock may be utilized in making acquisitions.
<PAGE>
Transfer Agent
The Company is currently to employ Mountain Share Transfer Inc. and its
independent transfer agent
Reports to Stockholders
The Company plans to furnish its stockholders with an annual report for
each fiscal year containing financial statements audited by its independent
certified public accountants. In the event the Company enters into a business
combination with another company, it is the present intention of management to
continue furnishing annual reports to stockholders. Additionally, the Company
may, in its sole discretion, issue unaudited quarterly or other interim reports
to its stockholders when it deems appropriate. The Company intends to comply
with the periodic reporting requirements of the Securities Exchange Act of 1934
for so long as it is subject to those requirements.
PART II
Item 1. Market Price and Dividends on the Registrant's Common Equity and Other
Shareholder Matters
No public trading market exists for the Company's securities and all of its
outstanding securities are restricted securities as defined in Rule 144. There
were thirty (30) holders of record of the Company's common stock on December 31,
1998. No dividends have been paid to date and the Company's Board of Directors
does not anticipate paying dividends in the foreseeable future.
Item 2. Legal Proceedings
The Company is not a party to any pending legal proceedings, and no such
proceedings are known to be contemplated.
No director, officer or affiliate of the Company, and no owner of record or
beneficial owner of more than 5.0% of the securities of the Company, or any
associate of any such director, officer or security holder is a party adverse to
the Company or has a material interest adverse to the Company in reference to
pending litigation.
<PAGE>
Item 3. Changes in and Disagreements with Accountants.
Not applicable.
Item 4. Recent Sales of Unregistered Securities.
Since December 2, 1993 (the date of the Company's formation), the Company
has sold its Common Stock to the persons listed in the table below in
transactions summarized as follows:
NAME AND ADDRESS DATE OF NUMBER OF PRICE
OF SHAREHOLDER PURCHASE CONSIDERATION SHARES ISSUED PER SHARE
- - - -------------- -------- ------------- ------------- ---------
Gregory E. Boyd June 15, services 26,000 .--
6312 S. Fiddler's Green Cir. 1994
Suite 200N
Englewood, Co 80111
Libby Dewey June 14, $2,000 cash 8,000 .25
15861 E. 35th Avenue 1994
Aurora, CO 80011
Greg Bassett June 15, $5,000 cash 20,000 .25
17538 E. Caspian Place 1994
Aurora, CO 80013
Leo W. & July 13, $ 200 cash 800 .25
Yvonne B. Schenkier 1994
2984 S. Ingalls Way
Denver, CO 80227-3830
Roger and Mary Nilsen July 14, $1,000 cash 4,000 .25
306 W. Peakview Avenue 1994
Littleton, CO 80120
Todd Dewey July 15, $ 200 cash 800 .25
15861 E. 35th Avenue 1994
Aurora, CO 80011
<PAGE>
NAME AND ADDRESS DATE OF NUMBER OF PRICE
OF SHAREHOLDERS PURCHASE CONSIDERATION SHARES ISSUED PER SHARE
- - - --------------- -------- ------------- ------------- ---------
Martin J. Flaum July 6, $ 200 cash 800 $.25
10023 Irving Street 1994
Westminster, CO 80030-6755
Dr. F.H. Carey July 18, $ 200 cash 800 .25
9888 E. Vassar Drive L-305 1994
Denver, CO 80231
John Deon July 19, $ 100 cash 400 .25
2235 S. Nile Court 1994
Aurora, CO 80014
Laurie J. Peckham July 26, $ 50 cash 200 .25
3082 S. Fairplay Street 1994
Aurora, CO 80014
John B. Collins, Jr. July 28, $ 100 cash 400 .25
P.O. Box 260432 1994
Highlands Ranch, CO 80126
Lue E.C. Collins July 28, $ 100 cash 400 .25
10755 Longs Way 1994
Parker, CO 80134
Ebony Janae Hollins July 29, $ 100 cash 400 .25
11980 E. Jewell Avenue 1994
Aurora, CO 80012
Eddie F. Scott Aug. 9, $5,000 cash 20,000 .25
18723 E. Brown Place 1994
Aurora, CO 80013
Mark S. Urich Sept. 15, 250 cash 1,000 .25
6312 S. Fiddler's Green Cir 1994
Suite 200N
Englewood, CO 80111
Te Huey Urich Sept. 13, $2,500 cash 10,000 .25
6312 S. Fiddler's Green Cir. 1994
Suite 200N
Englewood, CO 80111
Hsu Chu Tzng Sept. 13, $ 500 cash 2,000 .25
Fourth Floor, 1994
No. 39, Lane 51,
Hsin Tung Street
Taipei, Taiwan R.O.C.
Leah Kristine Dow Sept. 23, $ 15 cash 60 .25
2575 S. Syracuse Way, B-104 1994
Denver, CO 80231
<PAGE>
NAME AND ADDRESS DATE OF NUMBER OF PRICE
OF SHAREHOLDER PURCHASE CONSIDERATION SHARES ISSUED PER SHARE
- - - -------------- -------- ------------- ------------- ---------
Kandi Gardner Sept. 23, $ 25 cash 100 .25
13881 W. 68th Way 1994
Arvada, CO 80004
Joseph P. Seaman Sept. 25, $ 25 cash 100 .25
810 Stonemountain Dr. 1994
#208
Windsor, CO 80550
Douglas F. Richardson Sept. 25, $ 25 cash 100 .25
P.O. Box 44 1994
Johnstown, CO 80534
Steven Ciciora Sept. 26, $ 17 cash 68 .25
18312 E. Harvard Place 1994
Aurora, CO 80013
Walter Ciciora Sept. 26, $ 25 cash 100 .25
1010 S. Zeno Way 1994
Aurora, CO 80017
Christopher F. Carter Sept. 26, $ 25 cash 100 .25
6053 S. Lamar Drive 1994
Littleton, CO 80123
Nien-Tzu Tan Oct. 6, $1,000 cash 4,000 .25
4392 S. Ceylon Way 1994
Aurora, CO 80015
Gregory E. Boyd Dec. 3, $ 333 33,334 (.001)
6312 S. Fiddler's Green Cir. 1994 services*
Suite 200N
Englewood, CO 80111
Te Huey Urich Oct. 28, $ 333 332,333 (.001)
6312 S. Fiddler's Green Cir. 1994 services*
Suite 200N
Englewood, CO 80111
Donald R. Schenkier Oct. 28, $ 333 333,333 (.001)
555 W. Peakview Avenue 1994 services*
Littleton, CO 80120
G. Paul Music Oct. 10, $2,500 100,000 .025
4401 S. Tamarac Pkwy, 1994 services**
B-101
Denver, CO 80237
Dwayne DeSilvia Sept.15, $2,500 100,000 .025
1010 S. Zeno Way 1994 services**
Aurora, CO 80017
<PAGE>
NAME AND ADDRESS DATE OF NUMBER OF PRICE
OF SHARE HOLDERS PURCHASE CONSIDERATION SHARES ISSUED PER SHARE
- - - ---------------- -------- ------------- ------------- ----------
Ebony Janae Hollins July 29, $ 100 cash 400 $.25
11980 E. Jewell Avenue 1994
Aurora, CO 80012
Paul A. and July 22, 2000 cash 8,000 .25
Vicki L. LeRoue 1996
31353 N. Bermuda Dunes Dr.
Evergreen, CO
Steven L. Earley Oct. 26, 250 services** 250,000 .001
7204 S. Houston Waring Cir. 1996
Littleton, CO
*Consideration in the way of services consisted of pre-incorporation consulting
services rendered to the Registrant related to investigating and developing the
Registrant's proposed business plan and capital structure and completing the
organization and incorporation of the Registrant.
**Consideration consisted of consulting services rendered to the Registrant
related to the Registrant's business plan and capital structure.
Each of the sales listed above was made for cash or services. All of the
listed sales were made in reliance upon the exemption from registration offered
by Section 4(2) of the Securities Act of 1933, as amended. Based upon
Subscription Agreements completed by each of the subscribers, the Company had
reasonable grounds to believe immediately prior to making an offer to the
<PAGE>
private investors, and did in fact believe, when such subscriptions were
accepted, that such purchasers (1) were purchasing for investment and not with a
view to distribution, and (2) had such knowledge and experience in financial and
business matters that they were capable of evaluating the merits and risks of
their investment and were able to bear those risks. The purchasers had access to
pertinent information enabling them to ask informed questions. The shares were
issued without the benefit of registration. An appropriate restrictive legend is
imprinted upon each of the certificates representing such shares, and
stop-transfer instructions have been entered in the Company's transfer records.
All such sales were effected without the aid of underwriters, and no sales
commissions were paid.
Item 5. Indemnification of Directors and Officers
The Articles of Incorporation and the Bylaws of the Company, filed as
Exhibits 3.1 and 3.2, respectively, provide that the Company will indemnify its
officers and directors for costs and expenses incurred in connection with the
defense of actions, suits, or proceedings where the officer or director acted in
good faith and in a manner he reasonably believed to be in the Company's best
interest and is a party by reason of his status as an officer or director,
absent a finding of negligence or misconduct in the performance of duty.
<PAGE>
FINANCIAL STATEMENTS
(A Development Stage Company)
ROCKY MOUNTAIN FINANCIAL ENTERPRISES, INC.
F-1
<PAGE>
ROCKY MOUNTAIN FINANCIAL ENTERPRISES, INC.
(A Development Stage Company)
Index to Financial Statements
Report of Independent Auditors i
Balance Sheet ii
Statement of Operations iii
Statement of Changes in
Stockholders' Equity iv
Statement of Cash Flows v
Notes to Financial Statements vi
F-2
<PAGE>
ROCKY MOUNTAIN FINANCIAL ENTERPRISES, INC.
A Development Stage Company
FINANCIAL STATEMENTS
December 31, 1997 & 1996
F-3
<PAGE>
Michael B. Johnson & Co., P.C.
(A Professional Corporation)
Certified Public Accountants
9175 East Kenyon Ave., Suite 100
Denver. Colorado 80237
Michael 8. John&on C.P.A,
Member: A.I,C.P.A.
Colorado Society of C.P.A.'s [303) 796-0099
Independent Auditors' Report
Board of Directors
Rocky Mountain Financial Enterprises, Inc.
We have audited the accompanying balance sheet of Rocky Mountain Financial
Enterprises, Inc. (A Development Stage Company) as of December 31, 1997 and
December 31, 1996 and the related statements of operations, cash flows, and
changes in stockholders' equity for file period December 2, 1993 (Inception),
through December 31, 1997 and the fiscal year ended December 31, 1997 and 1996.
These financial statements are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with gcnerally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statements presentation.
Wc believe that our audits provide a reasonable basis for our opinion.
The accompanying financial statements have been prepared assuming that the
company will continue as a going concern. As shown in the financial statements,
the company incurred a net loss of $123,343 since inception. These factors
indicate that the company may be unable to continue in existence. The financial
statements do not include any adjustments relating to the amounts and
classification of liabilities that might be necessary in the event the company
cannot continue in existence.
In our opinion, the financial statcmcnts referred to above present fairly, in
all material respects, the financial positions of Rocky Mountain Financial
Enterprises, Inc. at Deccmbcr 31, 1997 and December 31, 1996 and the results of
its operations and its cash flows for the period December 2, 1993 (Inception),
through December 31, 1997 and the fiscal year ended December 31, 1997 and 1996,
in conformity with generally accepted accounting principles.
/S/Michael B. Johnson & Co., P.C.
---------------------------------
Denver. Colorado
October 15, 1998
F-4
<PAGE>
DECEMBER DECEMBER
31, 1997 31, 1996
-------- --------
ASSETS
CURRENT ASSETS:
Cash $ 50 $ 1,525
------------ --------------
Total Current Assets 50 1,525
OTHER ASSETS:
Organizational Costs
Net of Amortization 200 400
--- ---
Total Other Assets 200 400
TOTAL ASSETS $ 250 $ 1,925
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued Expenses $ 9,598 $ 7,780
Notes Payable 52,488 52,488
------ ------
Total Current Liabilities 62,086 60,268
Stockholders'Equity:
Common Stock, no par value, 20,000,000
authorized, 1,442,028 1,442,028
issued and outstanding 61,507 61,507
Preferred Stock, no par value
5,000,000 authorized, none issued
and outstanding - -
Deficit Accumulated During
the Development Stage (123,343) (119,850)
-------- --------
Total Stockholders' Equity (61,836) (58,343)
------- -------
TOTAL LIABILITIES STOCKHOLDERS' EQUITY $ 250 $ 1,925
============ ============
The Accompanying Notes Are An Integrall Part of These Financial Statements
F-5
<PAGE>
<TABLE>
<CAPTION>
For the For the December 2, 1993
Year Ended Year Ended (Inception)
December 31, December 31, through
December 31,
1997 1996 1997
---- ---- ----
<S> <C> <C> <C>
Revenue, Consulting Fees $ 5,000 $ - $ 8,000
Operating Expenses:
Consulting Fees 2,200 16,750 73,955
Office Expense 3,214 2,493 8,680
Travel - - 4,989
Telephone Expense 679 706 2,559
Professional Fees 1,500 5,000 28,627
Rent - 8,800 10,022
Interest Expense 700 700 1,711
Amortization Expense 200 200 800
--- --- ---
Total Operating Expense 8,493 34,649 131,343
Net (Loss) Accumulated
During the Development Stage $ (3,493) $(34,649) $(123,343)
========= ======== =========
Weighted Average Number
of Shares Outstanding 1,442,028 1,265,428 1,442,028
Net Loss Per Common Share (0.01) (0.03) (0.09)
The Accompanying Notes Are An Integral Part of These Financial Statements
</TABLE>
F-6
<PAGE>
<TABLE>
<CAPTION>
For the For the December 2, 1993
Year Ended Year Ended (Inception) through
December 31, December 31, December 31,
1997 1996 1997
<S> <C> <C> <C>
Cash Flows From
Operating Activities:
Net (Loss) (3,493) (34,649) (123,343)
Increase(Decrease) in
Accrued Expense 1,818 (2,526) 9,598
Increase in Organization Costs - - (1,000)
Amortization Expense 200 200 800
--- --- ---
Net Cash Flows Used
for Operations (1,457) (36,975) (113,945)
Cash Flows from
Financing Activities:
Sale of Stock - 2,000 61,507
Notes Payable - 25,000 52,488
------ ------ ------
Net Cash Provided by Financing
Activities - 27,000 113,995
Increase (Decrease) in Cash (1,475) (9,975) 50
------ ------ ------
Cash and Cash Equivalents,
Beginning of Year 1,525 11,500 -
----- ------ ------
Cash and Cash Equivalents,
End of Year $ 50 $ 1,525 $ 50
====== ======= ========
Supplemental Schedule of
Non-Cash Investing and
Financing Activity:
The officers of the Company
were issued Stock for services.
These services were valued at
$1,000 and included in
Organizational Costs. $ - $ - $ 1,000
Consulting Fee Services for
Stock - 12,500 41,000
------ ------ ------
Interest Paid - - -
------ ------ ------
Taxes Paid - - -
------ ------ ------
The Accompanying Notes Are An Integral Part of These Financial Statements.
</TABLE>
F-7
<PAGE>
<TABLE>
<CAPTION>
Per Number Common Accumulated
Date Consideration Share Shares Stock Deficit Totals
- - - ---- ------------- ----- ------ ----- ------- ------
<S> <C> <C> <C> <C> <C>
12/03/93 Services 0.001 52,000 $52 - 52
------ --- - --
Balance at
12/31/93 52,000 $52 $ - $52
03/31/94 Services 0.001 948,000 948 - 948
06/16/94 Cash 0.25 28,000 7000 - 7,000
07/14/94 Cash 0.25 800 200 - 200
07/15/94 Cash 0.25 4,000 1000 - 1,000
07/25/94 Cash 0.25 2,000 500 - 500
07/31/94 Cash 0.25 2,200 550 - 550
08/01/94 Cash 0.25 400 100 - 100
08/09/94 Cash 0.25 20,000 5000 - 5,000
09/13/94 Cash 0.25 12,000 3000 - 3,000
09/15/94 Services 0.25 10,000 2500 - 2,500
09/21/94 Services 0.25 100,000 25000 - 25,000
09/23/94 Cash 0.25 160 40 - 40
09/25/94 Cash 0.25 200 50 - 50
09/26/94 Cash 0.25 268 67 - 67
10/06/94 Cash 0.25 4,000 1000 - 1,000
Deficit
Accumulated
12/31/94 - - (76,381) (76,381)
------ ------ -------- --------
Balance
at 12/31/94 1,184,028 47,007 $ (76,381) $(29,374)
Deficit
Accumulated
12/31/95 - - (8,820) (8,820)
------ ------ ------- -------
Balance at
12/31/95 1,184,028 47,007 $ (85,201) $(38,194)
--------- ------ --------- --------
02/15/96 Cash 0.25 8,000 2,000 - 2,000
10/26/96 Services 0.05 250,000 12,500 - 12,500
Deficit
Accumulated
12/31/96 - - (34,649) (34,649)
------ ------ -------- --------
Balance at
12/31/96 1,442,028 61,507 (119,850) (58,343)
Deficit
Accumulated
12/31/97 - - (3,493) (3,493)
------ ------ ------- -------
Balance at
12/31/97 1,442,028 $61,507 $(123,343) $(61,836)
========= ======= ========= ========
</TABLE>
F-8
<PAGE>
ROCKY MOUNTAIN FINANCIAL ENTERPRISES. INC
(A Development Stage Company)
Notes to Financial Statements
December 31, 1997 & 1996
Note A- Summary of Significant Accounting Polices:
A Summary of the significant accounting polices consistently applied in the
preparation of the,ccompanying financial statements follows:
I. Development Stage Company
-------------------------
Rocky Mountain Financial Entreprises, Inc was incorporated December 2, 1993
under the laws of the State of Colorado for the purpose of engaging in the
transactions of all lawful business. The Company is presently engaged in
providing consulting services as to methods of obtaining financing. Activity to
date has been primarily organization of the Company. Although the company has
commenced its principal business operations, the revenues therefrom are not
significant enough to warrant a reclassification from the status of a company in
the development stage.
The accompanying financial statements have been prepared on the going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The company's continuation as a
going concern is dependent on its ability to generate sufficient cash flows to
meet its obligations on a timely basis, to raise, additional as may be required,
and ultimately to attain successful operations .The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
2. Basis of Accounting
--------------------
The financial statements arc presented on the accrual basis of accounting.
The Corporation's fiscal year end is December 31.
Organizational costs are being amortized over a 60-month period.
Cash Equivvalents:
- - - ------------------
For purposes of thc statement of cash flows, the Corporatiou considcrs all cash
and other highly liquid investments with initial maturities of three months or
less to be cash equivalents.
Estimates:
- - - ----------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
Net loss per share is based on the weighted average number of common shares and
common share equivalents outstanding during the period.
F-9
<PAGE>
ROCKY MOUNTAIN FINANCIAL ENTERPRISES, INC.
(A Dcvclopment Stage Company)
Notes to Financial Statelnents
December 31, 1997 & 1996
3. Stockholders' Equity:
---------------------
Of the 20,000,000 shares of no par value common stock authorized, 1,000,000
shares were issued to thc officers of the Corporation for services rendered.
These services were valued at $1,000 and are included in the organizational
costs.
4. Notes Payable
--------------
Notes Payable consists of tile following:
Notes Payable to G. Paul Music Ltd., 7% annual
rate, note started Septetnber 19, 1994 and matures
May 31 1995. $10,000
Notes Payable to Sole Track. Inc.,
Non-interest bearing and uncollateralized. 17,488
Notes Payable to Steven L. Early for $25,000.
In consideration of making the loan Mr. Earley
was given 250,000 shares. This Note is a non-interest
bearing demand note. 25,000
------
Total Notes Payable 52,488
======
5. Related Party Transaction:
--------------------------
The officers and directors of this company are also officers and directors of
other companies. The chairman of the board loaned the Company funds utilizing
non-interest-bearing demand notes.
6. Officers and Directors Compensation
-----------------------------------
On June 1, 1994, the Board of Directors authorized that the Company will
compensate each of its two officers $2,000 per month and one director $500 per
month for their services to the company. The chairman stated that the
compensation referred to above has been cancelled and the officers and directors
will not be paid the above mentioned remuneration.
7. Proposed Stock Offering:
------------------------
The Board of Directors on June 30, 1994 authorized the Company to undertake a
public offering of 40,000 shares of the Company's common stock at a price of ONE
DOLLAR per share in a best efforts offering. No escrow account will be
established and the funds will be utilized by the Company as received, and are
not returnable.
F-10
<PAGE>
PART III
Item 1. Index to Exhibits
The Exhibits listed below are filed as part of this Registration
Statement.
Exhibit
No. Document
EX-3.1 Articles of Incorporation and Amendments to Articles of
Incorporation
EX-3.2 Bylaws
EX-3.3 Specimen Stock Certificate
EX-27 Financial Data Schedule
Item 2. Description of Exhibits.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
ROCKY MOUNTAIN FINANCIAL ENTERPRISES, INC.
By: /s/ Donald R. Schenkier
Donald R. Schenkier, President and Director
EXHIBIT 3.1
Articles of Incorporation and Amendments to Articles of Incorporation
<PAGE>
ARTICLES OF INCORPORATION
OF
ROCKY MOUNTAIN FINANCIAL ENTERPRISES, INC.
ARTICLE I
---------
The name of the corporation is Rocky Mountain Financial Enterprises, Inc.
(the "Corporation").
ARTICLE II
----------
The Corporation shall have perpetual existence.
ARTICLE III
-----------
The nature of the business, the object of and the purpose for which the
Corporation is created is to engage in the transaction of all lawful business
for which corporations may be incorporated under and pursuant to the laws of the
State of Colorado.
ARTICLE IV
----------
The Corporation shall have and may exercise all of the rights, powers
and privileges now or hereafter conferred upon corporations organized under and
pursuant to the laws of the State of Colorado including, but not limited to, the
power to enter into general partnerships, limited partnerships (whether the
Corporation be a limited or general partner), joint ventures, syndicated pools,
associations and other arrangements for carrying on one or more of the purposes
set forth in Article III hereof, jointly or in common with others. In addition,
the Corporation may do everything necessary, suitable or proper for the
accomplishment of its corporate purposes.
ARTICLE V
---------
A. Authorized Shares
-----------------
The aggregate number of shares of capital stock which the Corporation
shall have authority to issue is 10,000 shares of common stock with no par
value, and 10,000 shares of preferred stock with no par value. The consideration
for the issuance of shares of stock of the Corporation may be paid in whole or
in part in money, in other property, tangible or intangible, or in labor or
<PAGE>
services actually performed for the Corporation All shares of fully paid and
stock of the Corporation when issued shall be nonassessable.
B. Common Stock
------------
(a) After the requirements with respect to preferential dividends on the
preferred stock, if any, shall have been met, and after the Corporation shall
have complied with all the requirements, if any, with respect to the setting
aside of sums as sinking funds or redemption or purchase accounts, then, and not
otherwise, the holders of the common stock shall be entitled to receive such
dividends as may be declared from time to time by the Board of Directors of the
Corporation.
(b) After distribution in full of the preferential amount, if any, to be
distributed to the holders of the preferred stock in the event of voluntary or
involuntary liquidation, distribution or sale of assets, dissolution, or
winding-up of the Corporation, the holders of the common stock shall be entitled
to receive all of the remaining assets of the Corporation, tangible and
intangible, of whatever kind available for distribution to shareholders, ratably
in proportion to the number of shares of the common stock held by them
respectively.
(c) Except as may otherwise be required by law, each holder of the
common stock shall have one vote in respect of each share of the common stock
held by such holder on all matters voted upon by the shareholders.
C. Preferred Stock
---------------
Shares of preferred stock may be divided into such series as may be
established, from time to time, by the Board of Directors. The Board of
Directors, from time to time, may fix and determine the relative rights and
preferences of the shares of any series so established.
D. Transfer Restrictions
---------------------
The Corporation shall have the right, by appropriate action, to impose
restrictions upon the transfer of any shares of stock from time to time issued,
or any interest therein; provided, however, that any such restrictions, or
notice of the substance thereof, shall be set forth upon the face or back of the
certificates representing such shares of stock.
E. Preemptive Riqhts
-----------------
The owners of shares of stock of the Corporation shall not be entitled
as a right to purchase or subscribe for any unissued or treasury shares of the
Corporation of any class or series, or anyadditional shares of the Corporation
<PAGE>
of any class or series to be issued by reason of any increase in the authorized
shares of the Corporation of any class or series, or any bonds, certificates of
indebtedness, debentures or other securities, rights, warrants, or options
convertible into shares of the Corporation of any class or series.
F. Majority Vote
-------------
In any and every action where the vote or concurrence of greater than a
majority of shareholders is required, to the fullest extent permitted by the
laws of the State of Colorado (currently set forth in C.R.S. 7-4-118), as the
same now exists or may hereafter be amended, such requirement shall be reduced
to the vote or concurrence of a majority of the shareholders.
ARTICLE VI
----------
The private property of the shareholders of the Corporation shall not be
subject to the payment of the debts, liabilities or obligations of the
Corporation.
ARTICLE VII
-----------
The business and affairs of the Corporation shall be managed by a Board
of Directors which shall exercise all the powers of the Corporation except as
otherwise provided in the Bylaws, these Articles of Incorporation or by the laws
of the State of Colorado. The number of directors of the Corporation shall be no
fewer than three; provided, however, that if all outstanding shares of stock of
the Corporation entitled to vote in the election of directors of the Corporation
are held of record by fewer than three shareholders, there need be only as many
directors as there are shareholders of record. Subject to such limitation, the
number of directors shall be fixed by resolution of the Board of Directors and
may be increased or decreased by resolution of the Board of Directors, but no
decrease shall have the effect of shortening the term of any incumbent director.
At such time, if any, when the Board of Directors consists of six or more
members, in lieu of electing the whole number of directors annually, the Board
of Directors may by appropriate resolution divide the directors into either two
or three classes, each class to be as nearly equal in number as possible, the
term of office of directors of the first class to expire at the first annual
meeting of shareholders after their election, that of the second class to expire
at the second annual meeting after their election, and that of the third class,
if any, to expire at the third annual meeting after their election. At each
annual meeting after such classification, the number of directors equal to the
number of the class whose term expires at the time of such meeting shall be
elected to hold office until thesecond succeeding annual meeting, if there are
<PAGE>
two classes, or until the third succeeding annual meeting, if there are three
classes. No classification of directors shall be effective prior to the first
annual meeting of shareholders.
ARTICLE VIII
------------
The initial Board of Directors shall consist of two members. The names
and addresses of the persons who shall serve as the directors until the first
annual meeting of shareholders or until their successors are duly elected and
qualified are as follows:
Name Address
Mark S. Urich 6312 South Fiddler's Green Circle,
Suite 200N
Englewood, Colorado 80111
Gregory E. Boyd 6312 South Fiddler's Green Circle,
Suite 200N
Englewood, Colorado 80111
ARTICLE IX
----------
Cumulative voting in the electionof directors of the Corporation shall
not be allowed.
ARTICLE X
---------
A. Power to Indemnify
------------------
To the fullest extent permitted by the laws of the State of Colorado
(currently set forth in C.R.S. 7-3-101.5), as the same now exists or may
hereafter be amended, the Corporation shall indemnify its directors and
officers. Other employees, trustees and agents of the Corporation may be
indemnified by the Corporation upon such terms and conditions, consistent with
applicable law, as the Board of Directors deems appropriate.
B. Expenses Payable in Advance
---------------------------
To the fullest extent permitted by the laws of the State of Colorado
(currently set forth in C.R.S. 7-3-101.5), as the same now exists or may
hereafter be amended, the Corporation shall pay for or reimburse the reasonable
expenses of its directors and officers who are parties to a proceeding that is
or may be subject to indemnification under this Article X in advance of the
final disposition of such proceeding. Such expenses incurred by other employees,
trustees and agents may be so paid upon such terms and conditions, consistent
<PAGE>
with applicable law, as the Board of Directors deems appropriate.
C. Non-exclusivity
---------------
The indemnification and the advancement of expenses provided by, or
granted pursuant to, this Article X shall not be deemed exclusive of any other
rights to which the person seeking such indemnification or advancement may be
entitled under any law, Bylaw, agreement, contract, vote of shareholders or
Board of Directors or pursuant to the direction (howsoever embodied) of any
court of competent jurisdiction or otherwise, both as to actions in such
person's official capacity and as to actions in another capacity while holding
such office. The provisions of this Article X shall not be d~emed to preclude
any person being indemnified who is not specified in this Article X but with
respect to which the Corporation has the power or obligation to indemnify under
the provisions of the laws of the State of Colorado or otherwise.
D. Insurance
---------
The Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee, fiduciary or agent of the
Corporation, or who, while a director, officer, employee, fiduciary or agent of
the Corporation, is or was serving at the request of the Corporation as a
director, officer, partner, trustee, employee, fiduciary or agent of any other
foreign or domestic corporation or of any partnership, joint venture, trust,
other enterprise or employee benefit plan against any liability asserted against
or incurred by such person in any such capacity or arising out of such person's
status as such, whether or not the Corporation would have the power to indemnify
such person against such liability under the provisions of the laws of the State
of Colorado or otherwise. Any such insurance may be procured from any insurance
company designated by the Board of Directors of the Corporation, whether such
insurance company is formed under the laws of the State of Colorado or any other
jurisdiction of the United States or elsewhere, including any insurance company
in which the Corporation has equity or any other interest, through stock
ownership or otherwise.
E. Survival
--------
The indemnification and the advancement of expenses provided by, or
granted pursuant to, this Article X shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee, fiduciary or agent of the Corporation and shall inure to the
benefit of the heirs, executors and administrators of such a person. No
amendment of this Article X shall affect any right of any director, officer,
employee, fiduciary, agent or other person based on any event or proceeding
occurring prior to such amendment.
<PAGE>
F. Meaninq of "Corporation" for Purposes of Article X
--------------------------------------------------
For purposes of this Article X, reference to the "Corporation" shall
include, in addition to any resulting or surviving corporation of the
Corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had the power and authority to indemnify its
directors, officers, employees, fiduciaries or agents, so that any person who is
or was a director, officer, employee, fiduciary or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee, fiduciary or agent of another corporation,
partnership, trust, joint venture, syndicate or other enterprise, shall stand in
the same position under the provisions of this Article X with respect to the
resulting or surviving corporation as such person would have with respect to
such constituent corporation if its separate existence had continued.
G. Elimination of Personal Liability of Directors
----------------------------------------------
To the fullest extent permitted by the laws of the State of Colorado
(currently set forth in C.R.S. 7-3-101), as the same now exists or may hereafter
be amended, no director of the Corporation shall be liable to the Corporation or
to its shareholders for monetary damages for breach of fiduciary duty as a
director.
ARTICLE XI
----------
To the fullest extent permitted by the laws of the State of Colorado
(currently set forth in C.R.S. 7-5-114.5), as the same now exists or may
hereafter be amended, no contract or transaction between the Corporation and one
or more of its directors, or between the Corporation and any other corporation,
partnership, association, or other organization in which one or more of its
directors or officers are d/rectors or officers or have a financial interest,
shall be void or voidable solely for that reason or solely because the director
or officer was present at or participated in the meeting of the board or
committee thereof which authorized, approved, or ratified the contract or
transaction or solely because such person's or their votes were counted for such
purpose.
ARTICLE XII
-----------
The Corporation's principal place of business in the State of Colorado
shall be 6312 South Fiddler's Green Circle, Suite 200N, Englewood, Colorado,
80111 or such other address as the Board of Directors may designate. The address
of the Corporation's initial registered office shall be the Law Offices of Fay
M. Matsukage, Stanford Place 3, Suite 201, 4582 South Ulster Street Parkway,
<PAGE>
Denver, Colorado 80237-2633 and the name of the Corporation's initial registered
agent at such address is Fay M. Matsukage.
ARTICLE XIII
------------
The Board of Directors shall have the power to formulate and adopt the
Bylaws of the Corporation and from time to time amend, alter, repeal or
supplement any provision of such Bylaws as it deems proper for the
administration and regulation of the affairs of the Corporation.
ARTICLE XIV
-----------
The right is reserved to the Board of Directors from time to time to
amend, alter, repeal or supplement any provisions of these Articles of
Incorporation in any manner now or hereafter prescribed or permitted by the laws
of the State of Colorado, and the rights of the shareholders of the Corporation
shall be subject to the right reserved to the Board of Directors pursuant to
this Article XIV.
ARTICLE XV
----------
The name and address of the incorporator of the Corporation is Fay M.
Matsukage, Law Offices of Fay M. Matsukage, Stanford Place 3, Suite 201, 4582
South Ulster Street Parkway, Denver Colorado 80237-2633.
IN WITNESSWHRREOF, the undersigned incorporator has executed these
Articles of Incorporation this 30th day of November, 1993.
By /s/ Fay M. Matsukage
Fay M. Matsukage
Incorporator
<PAGE>
STATE OF COLORADO )
) SS.
CITY AND COUNTY OF DENVER )
Personally appeared before me this 30th day of November, 1993, Fay M.
Matsukage who, being first duly sworn, declared that she executed the foregoing
Articles of Incorporation and that the statements therein are true and correct
to the best of her knowledge and belief.
Witness my hand and official seal.
/s/ Brenda M. Johnson
Brenda M. Johnson Notary Public
My commission expires:
9-9-96
1:ARTICLES
<PAGE>
ARTICLES OF AMENDMENT
TO THE
941050670 $25.00
SOS 05-03-94 08:30
ARTICLES OF INCORPORATION
OF
ROCKY MOUNTAIN FINANCIAL ENTERPRISES, INC.
Pursuant to the provisions of the Colorado Corporation Code, the
undersigned corporation, adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is Rocky Mountain Financial Enterprises,
Inc.
SECOND: The following amendment to the Articles of Incorporation was
adopted April 21, 1994 by vote of the shareholders.The number of shares voted
for the amendment was sufficient for approval.
ARTICLE V
---------
Authorized Shares
- - - -----------------
The aggregate number of shares of capital stock which the Corporation
shall have authority to issue is 20,000,000 shares of common stock with no par
value, and 5,000,000 shares of preferred stock with no par value. The
consideration for the issuance of shares of stock of the Corporation may be paid
in whole or in part in money, in other property, tangible or intangible, or in
labor or services actually performed for the Corporation. All shares of stock of
the Corporation when issued shall be fully paid and nonassessable.
THIRD: The manner, if not set forth in such amendment, in which any
exchange, reclassification, or cancellation of issued shares provided for the
amendment shall be effected, is as follows: None.
FOURTH: The manner in which such amendment effects a change in the amount
of stated capital, and the amount of stated capital as changed by such
amendment, are as follows: None.
<PAGE>
ROCKY MOUNTAIN FINANCIAL
ENTERPRISES, INC.
(SEAL)
By: /s/ Gregory E. Boyd
Gregory E. Boyd, President
By: /s/ Mark S. Urich,
Mark S. Urich Secretary
STATE OF COLORADO )
) SS.
COUNTY OF ARAPAHOE )
Subscribed and sworn to before me this 28th day of April, 1994.
My Commission expires 9/9/96
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
ROCKY MOUNTAIN FINANCIAL ENTERPRISES, INC.
Pursuant to the provisions of the Colorado Corporation Code, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation
FIRST: The name of the corporation is Rocky Mountain Financial Enterprises,
Inc.
SECOND: The following amendment to the Articles of Incorporation was
adopted on April 21, 1994 by vote of the shareholders. The number of shares
voted for the amendment was sufficient for approval.
ARTICLE V
---------
A. Authorized Shares
-----------------
The aggregate number of shares of capital stock which the Corporation
shall have authority to issue is 20,000,000 shares of common stock with no par
value, and 5,000,000 shares of preferred stock with no par value. The
consideration for the issuance of shares of stock of the Corporation may be paid
in whole or in part in money, in other property, tangible or intangible, or in
labor or services actually performed for the Corporation. All shares of stock of
the Corporation when issued shall be fully paid and nonassessable:
THIRD: The manner, if not set forth in such amendment, in which any
exchange reclassification, or cancellation of issued shares provided for the
amendment shall be effected, is as follows: None.
FOURTH: The manner in which such amendment effects a change in thc amount
of stated capital, and the amount of stated capital as changed by such amendment
are as follows: None.
<PAGE>
ROCKY MOUNTAIN FINANCIAL
ENTERPRISES, INC.
(SEAL)
By:/s/Gregory E. Boyd
---------------------
Gregory E. Boyd, President
By:/s/Mark S. Urich
-------------------
Mark S. Urich, Secretary
STATE OF COLORADO )
) SS.
COUNTY OF ARAPAHOE )
Subscribed and sworn to before me this 28th day of April, 1994.
My Commission expires 9/9/96.
/s/Brenda M. Johnson
--------------------
Notary Public
EXHIBIT 3.2
Bylaws
<PAGE>
BYLAWS
OF
ROCKY MOUNTAIN FINANCIAL ENTERPRISES, INC.
ARTICLE I
OFFICES
-------
The principal office of the corporation need not be located in the State
of Colorado. The corporation may have such other offices or relocate its
principal offices either within or without the state of incorporation as the
Board of Directors may designate or as the business of the corporation may
require from time to time.
The registered office of the corporation required by the Articles of
Incorporation to be maintained in the state of incorporation may be, but need
not be, identical with the principal offices in the state of incorporation and
the address of the registered office may be changed from time to time by the
Board of Directors.
ARTICLE II
SHAREHOLDERS
------------
Section 1. Annual Meeting. The annual meeting of the shareholders shall
--------- ---------------
be held on such date as the Board of Directors shall determine by resolution. If
the election of directors shall not be held on the day thus designated for any
annual meeting of the shareholders, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
shareholders as soon thereafter as may be practicable.
Section 2. Special Meetings. Special meetings of the shareholders for
--------- -----------------
any purpose or purposes, unless otherwise prescribed by statute, may be called
by the President or by the Board of Directors and shall be called by the
President at the request of the holders of not less than one-tenth of all
outstanding shares of the corporation entitled to vote at such a meeting.
Section 3. Place of Meeting. The Board of Directors may designate any
--------- ----------------
place, either within or without the state of incorporation, as the place of
meeting for any annual or special meeting. A waiver of notice, signed by all
shareholders entitled to vote at a meeting, may designate any place, either
within or without the state of incorporation, as the place for the holding of
such meeting. If no designation is made, the place of meeting shall be the
registered office of the corporation in the state of incorporation.
<PAGE>
Section 4. Notice of Meeting. Written or printed notice, stating the
--------- ------------------
place, day, and hour of the meeting and, in case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered and/or
published as the laws of the state of incorporation shall provide.
Section 5. Fixinq of Record Date. For the purpose of determining
---------- -----------------------
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or shareholders entitled to receive payment of any
dividend, or in order to make a determination of shareholders for any other
proper purpose, the Board of Directors of the corporation may fix in advance a
date as the record date for any such determination of shareholders. Such date,
in case of a meeting of shareholders, shall not be less than ten days nor more
than fifty days prior to the particular action requiring such determination to
be taken
Section 6. Quorum. One-third of the outstanding shares of the
---------- ------
corporation entitled to vote, represented in person or by proxy shall constitute
a quorum at a meeting of shareholders, but less than one-third of the
outstanding shares are present at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticedo The shareholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough shareholders to leave less than a quorum.
Section 7. Manner of Acting. If a quorum is present, the affirmative
---------- -----------------
vote of the majority of the shares represented at the meeting and entitled to
vote on the subject matter shall be the act of the shareholders, unless the vote
of a greater proportion or number or voting by classes is otherwise required by
statute or by the Articles of Incorporation or these Bylaws.
Section 8. Proxies. At all meetings of shareholders, a shareholder may
---------- -------
vote by proxy executed in writing by the shareholder or by his duly authorized
attorney-in-fact. Such proxy shall be filed with the secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
eleven months from the date of its execution, unless otherwise provided in the
proxy.
Section 9. Votinq of Shares. Except as otherwise set forth in this
---------- -----------------
Article II, each outstanding share of common stock shall entitle the registered
holder thereof to one vote upon each matter submitted to a vote at a meeting of
shareholders.
<PAGE>
Section 10. Votinq of Shares by Certain Holders. Shares standing in the
---------- ------------------------------------
name of another corporation may be voted by such officer, agent, or proxy of the
other corporation as the bylaws of such corporation may prescribe or, in the
absence of such provision, as the board of directors of such corporation may
determine.
Shares held by an administrator, executor, guardian, or conservator may
be voted by him, either in person or by proxy, without a transfer of such shares
into his name. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of the shares into his name.
Shares standing in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his name if authority so to do is
contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Neither treasury shares nor shares held by another corporation, if the
majority of shares entitled to vote for the election of directors of such other
corporation is held by the corporation, may be voted, directly or indirectly, at
any meeting or counted in determining the total number of outstanding shares at
any given time.
Redeemable shares which have been called for redemption shall not be
entitled to vote on any matter and shall not be deemed outstanding shares on and
after the date on which written notice of redemption has been mailed to
shareholders and a sum sufficient to redeem such shares has been deposited with
a bank or trust company with irrevocable instruction and authority to pay the
redemption price to the holders of the shares upon surrender of certificates
therefor.
Section 11. Informal Action by Shareholders. Any action required to be
----------- -------------------------------
taken at a meeting of the shareholders or any other action which may be taken at
a meeting of the shareholders may be taken without a meeting, if a consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
Section 12. Votinq by Ballot. Voting on any question or in any election
---------- -----------------
may be by voice vote unless the presiding officer shall order or any shareholder
shall demand that voting by ballot.
<PAGE>
Section 13. Certification. The Board of Directors may adopt by
------------ --------------
resolution a procedure whereby a shareholder of the corporation may certify in
writing to the corporation that all or a portion of the shares registered in the
name of such shareholder are held for the account of a specified person or
persons. Upon receipt by the corporation of a certification complying with the
procedure thus established, the persons specified in the certification shall be
deemed, for the purpose or purposes set forth in the certification, to be the
holders of record of the number of shares specified in place of the shareholder
making the certification.
ARTICLE III
BOARD OF DIRECTORS
------------------
Section 1. General Powers. The business and affairs of the corporation
--------- ----------------
shall be managed by its Board of Directors. In addition to the powers and
authorities expressly conferred upon them by the Articles of Incorporation and
by these Bylaws, the Board may exercise all such powers of the corporation and
do all such lawful acts and things as are not by statute or by the Articles of
Incorporation or by these Bylaws directed or required to be exercised or done by
the shareholders.
The Board of Directors shall have the power from time to time to
delegate any of its powers in the ordinary course of business of the corporation
to any standing or special committee or to any officer or agent and to appoint
any persons as agents of the corporation with such powers (including the power
to subdelegate) and upon such terms as may be deemed fit.
Section 2. Number, Tenure, and Qualification. The number of directors of
--------- -----------------------------------
the corporation shall be as established from time to time by resolution of the
Board of Directors. The number of directors shall not be reduced to less than
three except that there need only be as many directors as there are shareholders
in the event that the outstanding shares are held of record by fewer than three
shareholders. Subject to the provisions of Article VIII, of the corporation's
Articles of Incorporation, each director shall hold office until the next annual
meeting of shareholders or until his successor has been elected and has
qualified. Directors need not be residents of the state of incorporation or
shareholders of the corporation.
Section 3. Reqular Meetinqs. A regular meeting of the Board of
----------- ------------------
Directors shall be held, without other notice than these Bylaws, immediately
after and at the same place as the annual meeting of shareholders. The Board of
Directors may provide, by resolution, for the holding of additional regular
meetings, without notice other than such resolution. The Board of Directors may
hold any such additional regular meetings by telephone conference or other means
<PAGE>
of electronic communication by which all directors can hear and speak to each of
the other directors.
Section 4. Special Meetings. Special meetings of the Board of Directors
--------- -----------------
may be called by or at the request of the Chairman of the Board of Directors,
the President, or any two directors. The person or persons authorized to call
special meetings of the Board of Directors may fix any place, either within or
without the state of incorporation, as the place for holding any special meeting
of the Board of Directors called by them. The Board of Directors may hold any
special meeting by telephone conference or other means of electronic
communication by which all directors can hear and speak to each of the other
directors.
Section 5. Notice. Notice of any special meeting shall be given at least
--------- -------
one day previous thereto by oral or written notice given or delivered personally
to each director. Any director may waive notice of any meeting. The attendance
of a director at a meeting shall constitute a waiver of notice of such meeting,
except where a director attends the meeting for the express purpose of objecting
to the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting. A director may attend a regular or
special meeting of the Board of Directors by telephone conference or other means
of electronic communication by which such director can hear and speak to each of
the other directors.
Section 6. Quorum. A majority of the members of the Board of
---------- --------
Directors shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors.
Section 7. Action by Consent of Board of Directors Without a Meeting.
---------- -----------------------------------------------------------
Any action required or permitted to be taken by the Board of Directors under any
provision of the laws of the state of incorporation may be taken without a
meeting if all members of the Board of Directors shall individually or
collectively consent in writing to such action. Such written consent or consents
shall be filed with the minutes of the proceedings of the Board of Directors.
Such action by written consent shall have the same force and effect as a
unanimous vote of such directors. Any certificate or other document filed under
any provision of the laws of the state of incorporation which relates to an
action so taken shall state that the-action was taken by unanimous written
consent of the Board of Directors without a meeting. Such statement shall be
prima facie evidence of such authority.
Section 8. Manner of Acting. The act of a majority of the directors
---------- ------------------
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
<PAGE>
The order of business at any regular meeting or special meeting of the
Board of Directors shall be:
1. Calling the roll.
2. Secretary's proof of due notice of meeting, if required. 3. Reading and
disposal of unapproved minutes.
4. Reports of officers.
5. Unfinished business.
6. New business.
7. Adjournment.
Section 9. Vacancies. Any vacancy occurring in the Board of Directors
---------- ----------
may be filled by the affirmative vote of a majority of the remaining directors
though less than a quorum of the Board of Directors. A director elected to fill
a vacancy shall be elected for the unexpired term of his predecessor in office.
Any directorship to be filled by reason of an increase in the number of
directors shall be filled by the affirmative vote of a majority of the directors
then in office or by an election at an annual meeting or at a special meeting of
shareholders called for that purpose. A director chosen to fill a position
resulting from an increase in the number of directors shall hold office only
until the next election of directors by the shareholders.
Section 10. Compensation. By resolution of the Board of Directors, the
---------- -------------
directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as a director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor or from receiving compensation for
any extraordinary or unusual service as a director.
Section 11. Presumption of Assent. A director of the corporation who is
----------- ----------------------
present at a meeting of the Board of Directors at which action is taken on any
corporate matter shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as the secretary
of the meeting before the adjournment thereof or shall forward such dissent by
registered mail to the Secretary of the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
Section 12. Resiqnation of Officers or Directors. Any director or other
officer may resign his office at any time, such resignation to be made in
writing and to take effect from the time of its receipt by the corporation
unless a time be fixed in the resignation and then it will take effect from that
date. The acceptance of the resignation shall not be required to make it
effective.
<PAGE>
Section 13. Removal. Any director or directors of the corporation may
----------- --------
be removed at any time, with or without cause, in the manner provided in the
applicable laws of the state of incorporation.
ARTICLE IV
OFFICERS
--------
Section 1. Number. The officers of the corporation shall be a President,
--------- ------
a Secretary, and a Treasurer, all of whom shall be designated executive officers
and each of whom shall be elected by the Board of Directors. A Chairman of the
Board of Directors, one or more Vice Presidents, and assistant officers as may
be deemed necessary may be elected or appointed by the Board of Directors. Any
two or more offices may be held by the same person, except the offices of
President and Secretary.
Section 2. Election and Term of Office. The executive officers of the
--------- ----------------------------
corporation shall be elected annually by the Board of Directors at the first
meeting of the Board of Directors held after each annual meeting of the
shareholders. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as may be practicable. Each
executive officer shall hold office until his successor shall have been duly
elected and shall have qualified, or until his death, or until he shall have
resigned or shall have been removed in the manner hereinafter provided.
Administrative assistant officers shall hold office at the pleasure of the
President.
Section 3. Removal. Any officer or agent elected or appointed by the
---------- --------
Board of Directors maybe removed by the Board of Directors whenever, it its
judgment, the best interests of the corporation would be served thereby, but
such removal shall be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of an officer or agent shall not of
itself create contract rights.
Section 4. Vacancies. A vacancy in any executive office, because
---------- ----------
of death, resignation, removal, disqualification, or otherwise, may be filled by
the Board of Directors for the unexpired portion of the term.
Section 5. Chairman of the Board of Directors. A Chairman cf the Board
--------- ------------------------
of Directors may be elected by the Board of Directors. He shall preside at all
meetings of the shareholders and of the Board of Directors.
Section 6. President. The President shall be the chief executive officer
--------- ----------
of the corporation and, subject to the control of the Board of Directors, shall
be in general charge of the business affairs of the corporation. He may sign,
<PAGE>
with the Secretary or any other proper officer of the corporation thereunto
authorized by the Board of Directors, certificates for shares of the
corporation, any deeds, mortgages, bonds, contracts, or other instruments which
the Board of Directors has authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the Board of
Directors or by these Bylaws to some other officer or agent of the corporation
or shall be required by law to be otherwise signed or executed, and, in general,
shall perform all duties incident to the office of President and such other
duties as may be prescribed by the Board of Directors from time to time.
Section 7. Secretary. The Secretary shall: (a) keep the minutes of all
--------- ----------
meetings of the corporation's shareholders and of the Board of Directors in one
or more books provided for the purpose; (b) see that all notices are duly given
in accordance with the provisions of these Bylaws and as required by law; (c) be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents, the execution of
which on behalf of the corporation under its seal is duly authorized; (d) keep a
register of the post office address of each shareholder which shall be furnished
to the Secretary by such shareholders; (e) sign with the President, or a Vice
President, certificates for shares of the corporation, the issuance of which
shall have been authorized by resolution of the Board of Directors; (f) have
general charge of the stock transfer books of the corporation; and (g) in
general, perform all duties incident to the office of Secretary and such other
duties as from time to time may be assigned to him by the President or by the
Board of Directors.
Section 8. Treasurer. If required by the Board of Directors, the
---------- ----------
Treasurer shall give a bond for the faithful discharge of his duties in such sum
and with such surety or sureties as the Board of Directors shall determine. He
shall: (a) have charge and custody of and be responsible for all funds and
securities of the corporation; (b) receive and give receipts for monies due and
payable to the corporation from any source whatsoever and deposit all such
monies in the name of the corporation in such banks, trust companies, or other
depositories as shall be selected in accordance with the provisions of Article V
of these Bylaws; and (c) in general, perform all the duties incident to the
office of Treasurer and such other duties as from time to time may be assigned
to him by the President or by the Board of Directors.
Section 9. Assistant Secretaries and Assistant Treasurers. The assistant
--------- ----------------------------------------------
secretaries, when authorized by the President, may sign with the President or a
Vice President certificates for shares of the corporation, the issuance of which
shall have been authorized by a resolution of the Board of Directors. The
assistant treasurers shall, if required by the Board of Directors, give bonds
for the faithful discharge of their duties in such sums and with such sureties
as the Board of Directors shall determine. The assistant secretaries and
assistant treasurers, in general, shall perform such duties as shall be assigned
to them by the Secretary or the Treasurer, respectively, or by the President.
<PAGE>
Section 10. Salaries. The salaries of the executive officers shall be
----------- ---------
fixed from time to time by the Board of Directors. No officer shall be prevented
from receiving such salary by reason of the fact that he is also a director of
the corporation. The salaries of the administrative assistant officers shall be
fixed by the President.
ARTICLE V
CONTRACTS, LOANS, CHECKS, AND DEPOSITS
--------------------------------------
Section 1. Contracts. The Board of Directors may authorize any officer
---------- ----------
or officers, or agent or agents to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
Section 2. Loans. No loans in excess of $5,000 shall be contracted on
--------- ------
behalf of the corporation, and no evidence of indebtedness in excess of $5,000
shall be issued in its name, unless authorized by a resolution of the Board of
Directors. Such authority may be general or confined to specific instances.
Section 3. Checks, Drafts, etc. All checks, drafts, or other orders for
------------------ ------------
the payment of money, notes, or other evidences of indebtedness, issued in the
name of the corporation, shall be signed by such officer or officers, or agent
or agents of the corporation in such manner as shall from time to time be
determined by resolution of the Board of Directors.
Section 4. DeDosits. Ail funds of the corporation not otherwise employed
--------- --------
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies, or other depositories as the Board of Directors may
select.
ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
------------------------------------------
Section 1. Certificates for Shares. Certificates representing shares of
--------- -----------------------
the corporation shall be respectively numbered serially for each class of
shares, or series thereof, as they are issued, shall be impressed with the
corporate seal or a facsimile thereof, and shall be signed by the Chairman of
the Board of Directors or by the President or a Vice President and by the
Treasurer or an assistant treasurer or by the Secretary or an assistant
secretary; provided, however, that such signatures may be facsimile if the
certificate is countersigned by a transfer agent or registered by a registrar
<PAGE>
other than the corporation itself or any of its employees. Each certificate
shall state the name of the corporation, the fact that the corporation is
organized or incorporated under the laws of the state of incorporation, the name
of the person to whom it is issued, the date of issue, the class (or series of
any class), the number of shares represented thereby, and the par value of the
shares represented thereby or a statement that such shares are without par
value. A statement of the designations, preferences, qualifications,
limitations, restrictions, and special or relative rights of the shares of each
class shall be set forth in full or summarized on the face or back of the
certificates which the corporation shall issue. In lieu thereof, the certificate
may set forth that such a statement or summary will be furnished to any
shareholder upon request without charge. Any restriction on transfer imposed by
the corporation shall be noted conspicuously on each certificate. Each
certificate shall be otherwise in such form as may be prescribed by the Board of
Directors and as shall conform to the rules of any stock exchange on which the
shares may be listed.
Section 2. Cancellation of Certificates. ALl certificates surrendered to
--------- ----------------------------
the corporation for transfer shall be canceled and no new certificates shall be
issued in lieu thereof until the former certificate for a like number of shares
shall have been surrendered and canceled, except as herein provided with respect
to lost, stolen, or destroyed certificates.
Section 3. Lost, Stolen, or Destroyed Certificates. Any shareholder
--------- ------------------------------------------
claiming that his certificate for shares is lost, stolen, or destroyed may make
an affidavit or affirmation of that fact and lodge the same with the Secretary
of the corporation, accompanied by a signed application for a new certificate.
Thereupon, and upon the giving of a satisfactory bond of indemnity to the
corporation not to exceed an amount double the value of the shares as
represented by such certificate (the necessity for such bond and the amount
thereof to be determined by the President or Treasurer of the corpcration), a
new certificate may be issued of the same tenor and representing the same
number, class, and series of shares as were represented by the certificate
alleged to be lost, stolen, or destroyed.
Section 4. Transfer of Shares. Subject to the terms of any shareholder
--------- ------------------
agreement relating to the transfer of shares or other transfer restrictions
contained in the Articles of Incorporation or authprized therein, shares of the
corporation shall be transferable on the books of the corporation by the holder
thereof in person, by his legal representative who shall furnish proper evidence
of authority to transfer, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary of the corporation, upon the
surrender and cancellation of a certificate or certificates for a like number of
shares. Upon presentation and surrender of a certificate for shares properly
endorsed and paymentof all taxes therefor, the transferee shall be entitled to
<PAGE>
a new certificate or certificates in lieu thereof. As against the corporation, a
transfer of shares can be made only on the books of the corporation and in the
manner hereinabove provided, and the corporation shall be entitled to treat the
holder of record of any share as the owner thereof and shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person, whether or not it shall be express, or other notice
thereof, save as expressly provided by the statutes of the state of
incorporation.
ARTICLE VII
SEAL
----
The Board of Directors shall provide a corporate seal, circular in form,
having inscribed thereon the corporate name, the state of incorporation, and the
word "Seal".
ARTICLE VIII
WAIVER OF NOTICE
----------------
Whenever any notice is required to be given to any shareholder or
director of the corporation, a waiver thereof in writing, signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
AMENDMENTS
----------
These Bylaws may be altered, amended, or repealed, and new Bylaws may be
adopted, by the affirmative vote of a majority of the members of the Board of
Directors represented at any regular or special meeting of the Board of
Directors.
ARTICLE X
UNIFORMITY OF INTERPRETATION AND SEVERABILITY
---------------------------------------------
The Bylaws shall be so interpreted and construed as to conform to the
Articles of Incorporation and the statutes of the state of incorporation or of
any other state in which conformity may become necessary by reason of the
qualification of the corporation to do business in such foreign state, and where
conflict between these Bylaws and the Articles of Incorporation or the statutes
of the state of incorporation has arisen or shall arise, these Bylaws shall be
considered to be modified to the extent, but only to the extent, conformity
shall require. If any provision hereof or the application thereof shall be
deemed to be invalid by reason of the foregoing sentence, such invalidity
<PAGE>
shall not affect the validity of the remainder of the Bylaws without the invalid
provision or the application thereof, and the provisions of these Bylaws are
declared to be severable.
CERTIFICATE
I hereby certify that the foregoing Bylaws, consisting of twelve (12)
pages, including this page, constitute the Bylaws of Rocky Mountain Financial
Enterprises, Inc. adopted by the Board of Directors as of December 3, 1993.
/S/Mark S. Urich
----------------
Secretary
EXHIBIT 3.3
Specimen Stock Certificate
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 000927131
<NAME> ROCKY MOUNTAIN FINANCIAL ENTERPRISES, INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 50
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 250
<CURRENT-LIABILITIES> 62,086
<BONDS> 0
0
0
<COMMON> 61,507
<OTHER-SE> (123,343)
<TOTAL-LIABILITY-AND-EQUITY> 250
<SALES> 0
<TOTAL-REVENUES> 5,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 8,493
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,493)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,493)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,493)
<EPS-PRIMARY> (.001)
<EPS-DILUTED> (.001)
</TABLE>
